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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from to .
Commission file number 001-33099
BlackRock, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
|
32-0174431 |
|
(State or Other Jurisdiction of Incorporation or Organization) |
|
(I.R.S. Employer Identification No.) |
50 Hudson Yards, New York, NY 10001
(Address of Principal Executive Offices) (Zip Code)
(212) 810-5300
(Registrant’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
Common Stock, $.01 par value |
|
BLK |
|
New York Stock Exchange |
1.250% Notes due 2025 |
|
BLK25 |
|
New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes |
|
X |
|
No |
|
|
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes |
|
X |
|
No |
|
|
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☒ |
|
Accelerated filer |
☐ |
Non-accelerated filer |
☐ |
|
Smaller reporting company |
☐ |
|
|
|
Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes |
|
|
|
No |
|
X |
As of July 31, 2023, there were 149,302,633 shares of the registrant’s common stock outstanding.
BlackRock, Inc.
Index to Form 10-Q
PART I
FINANCIAL INFORMATION
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Page |
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Item 1. |
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1 |
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2 |
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3 |
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4 |
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6 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
36 |
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Item 3. |
69 |
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Item 4. |
70 |
PART II
OTHER INFORMATION
Item 1. |
71 |
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Item 1A. |
72 |
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Item 2. |
73 |
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Item 6. |
74 |
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75 |
i
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
BlackRock, Inc.
Condensed Consolidated Statements of Financial Condition
(unaudited)
|
|
June 30, |
|
|
December 31, |
|
||
(in millions, except shares and per share data) |
|
2023 |
|
|
2022 |
|
||
Assets |
|
|
|
|
|
|
||
Cash and cash equivalents(1) |
|
$ |
6,834 |
|
|
$ |
7,416 |
|
Accounts receivable |
|
|
3,806 |
|
|
|
3,264 |
|
Investments(1) |
|
|
9,124 |
|
|
|
7,466 |
|
Separate account assets |
|
|
55,119 |
|
|
|
54,066 |
|
Separate account collateral held under securities lending agreements |
|
|
5,811 |
|
|
|
5,765 |
|
Property and equipment (net of accumulated depreciation and amortization of $1,434 and |
|
|
1,045 |
|
|
|
1,031 |
|
Intangible assets (net of accumulated amortization of $541 and $483 at |
|
|
18,228 |
|
|
|
18,302 |
|
Goodwill |
|
|
15,338 |
|
|
|
15,341 |
|
Operating lease right-of-use assets |
|
|
1,464 |
|
|
|
1,516 |
|
Other assets(1) |
|
|
5,875 |
|
|
|
3,461 |
|
Total assets |
|
$ |
122,644 |
|
|
$ |
117,628 |
|
Liabilities |
|
|
|
|
|
|
||
Accrued compensation and benefits |
|
$ |
1,374 |
|
|
$ |
2,272 |
|
Accounts payable and accrued liabilities |
|
|
1,156 |
|
|
|
1,294 |
|
Borrowings |
|
|
7,904 |
|
|
|
6,654 |
|
Separate account liabilities |
|
|
55,119 |
|
|
|
54,066 |
|
Separate account collateral liabilities under securities lending agreements |
|
|
5,811 |
|
|
|
5,765 |
|
Deferred income tax liabilities |
|
|
3,439 |
|
|
|
3,381 |
|
Operating lease liabilities |
|
|
1,814 |
|
|
|
1,835 |
|
Other liabilities(1) |
|
|
6,131 |
|
|
|
3,576 |
|
Total liabilities |
|
|
82,748 |
|
|
|
78,843 |
|
Commitments and contingencies (Note 14) |
|
|
|
|
|
|
||
Temporary equity |
|
|
|
|
|
|
||
Redeemable noncontrolling interests |
|
|
1,546 |
|
|
|
909 |
|
Permanent equity |
|
|
|
|
|
|
||
BlackRock, Inc. stockholders’ equity |
|
|
|
|
|
|
||
Common stock, $0.01 par value; |
|
|
2 |
|
|
|
2 |
|
Shares authorized: 500,000,000 at June 30, 2023 and December 31, 2022; |
|
|
|
|
|
|
||
Additional paid-in capital |
|
|
19,571 |
|
|
|
19,772 |
|
Retained earnings |
|
|
30,855 |
|
|
|
29,876 |
|
Accumulated other comprehensive loss |
|
|
(880 |
) |
|
|
(1,101 |
) |
Treasury stock, common, at cost (22,702,107 and 22,318,881 shares held at June 30, 2023 |
|
|
(11,340 |
) |
|
|
(10,805 |
) |
Total BlackRock, Inc. stockholders’ equity |
|
|
38,208 |
|
|
|
37,744 |
|
Nonredeemable noncontrolling interests |
|
|
142 |
|
|
|
132 |
|
Total permanent equity |
|
|
38,350 |
|
|
|
37,876 |
|
Total liabilities, temporary equity and permanent equity |
|
$ |
122,644 |
|
|
$ |
117,628 |
|
See accompanying notes to condensed consolidated financial statements.
1
BlackRock, Inc.
Condensed Consolidated Statements of Income
(unaudited)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions, except per share data) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment advisory, administration fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Related parties |
|
$ |
2,689 |
|
|
$ |
2,769 |
|
|
$ |
5,300 |
|
|
$ |
5,652 |
|
Other third parties |
|
|
922 |
|
|
|
919 |
|
|
|
1,813 |
|
|
|
1,869 |
|
Total investment advisory, administration fees |
|
|
3,611 |
|
|
|
3,688 |
|
|
|
7,113 |
|
|
|
7,521 |
|
Investment advisory performance fees |
|
|
118 |
|
|
|
106 |
|
|
|
173 |
|
|
|
204 |
|
Technology services revenue |
|
|
359 |
|
|
|
332 |
|
|
|
699 |
|
|
|
673 |
|
Distribution fees |
|
|
319 |
|
|
|
361 |
|
|
|
638 |
|
|
|
742 |
|
Advisory and other revenue |
|
|
56 |
|
|
|
39 |
|
|
|
83 |
|
|
|
85 |
|
Total revenue |
|
|
4,463 |
|
|
|
4,526 |
|
|
|
8,706 |
|
|
|
9,225 |
|
Expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Employee compensation and benefits |
|
|
1,429 |
|
|
|
1,414 |
|
|
|
2,856 |
|
|
|
2,912 |
|
Distribution and servicing costs |
|
|
518 |
|
|
|
572 |
|
|
|
1,023 |
|
|
|
1,146 |
|
Direct fund expense |
|
|
344 |
|
|
|
304 |
|
|
|
659 |
|
|
|
633 |
|
General and administration expense |
|
|
520 |
|
|
|
530 |
|
|
|
1,041 |
|
|
|
1,026 |
|
Amortization of intangible assets |
|
|
37 |
|
|
|
38 |
|
|
|
74 |
|
|
|
76 |
|
Total expense |
|
|
2,848 |
|
|
|
2,858 |
|
|
|
5,653 |
|
|
|
5,793 |
|
Operating income |
|
|
1,615 |
|
|
|
1,668 |
|
|
|
3,053 |
|
|
|
3,432 |
|
Nonoperating income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net gain (loss) on investments |
|
|
231 |
|
|
|
(314 |
) |
|
|
320 |
|
|
|
(416 |
) |
Interest and dividend income |
|
|
89 |
|
|
|
21 |
|
|
|
175 |
|
|
|
39 |
|
Interest expense |
|
|
(69 |
) |
|
|
(54 |
) |
|
|
(128 |
) |
|
|
(108 |
) |
Total nonoperating income (expense) |
|
|
251 |
|
|
|
(347 |
) |
|
|
367 |
|
|
|
(485 |
) |
Income before income taxes |
|
|
1,866 |
|
|
|
1,321 |
|
|
|
3,420 |
|
|
|
2,947 |
|
Income tax expense |
|
|
443 |
|
|
|
358 |
|
|
|
828 |
|
|
|
621 |
|
Net income |
|
|
1,423 |
|
|
|
963 |
|
|
|
2,592 |
|
|
|
2,326 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to |
|
|
57 |
|
|
|
(114 |
) |
|
|
69 |
|
|
|
(187 |
) |
Net income attributable to BlackRock, Inc. |
|
$ |
1,366 |
|
|
$ |
1,077 |
|
|
$ |
2,523 |
|
|
$ |
2,513 |
|
Earnings per share attributable to BlackRock, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
9.13 |
|
|
$ |
7.12 |
|
|
$ |
16.85 |
|
|
$ |
16.59 |
|
Diluted |
|
$ |
9.06 |
|
|
$ |
7.06 |
|
|
$ |
16.70 |
|
|
$ |
16.43 |
|
Weighted-average common shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
149.6 |
|
|
|
151.3 |
|
|
|
149.8 |
|
|
|
151.5 |
|
Diluted |
|
|
150.7 |
|
|
|
152.5 |
|
|
|
151.0 |
|
|
|
153.0 |
|
See accompanying notes to condensed consolidated financial statements.
2
BlackRock, Inc.
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net income |
|
$ |
1,423 |
|
|
$ |
963 |
|
|
$ |
2,592 |
|
|
$ |
2,326 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments(1) |
|
95 |
|
|
|
(416 |
) |
|
|
221 |
|
|
|
(541 |
) |
|
Comprehensive income (loss) |
|
|
1,518 |
|
|
|
547 |
|
|
|
2,813 |
|
|
|
1,785 |
|
Less: Comprehensive income (loss) attributable to |
|
|
57 |
|
|
|
(114 |
) |
|
|
69 |
|
|
|
(187 |
) |
Comprehensive income attributable to |
|
$ |
1,461 |
|
|
$ |
661 |
|
|
$ |
2,744 |
|
|
$ |
1,972 |
|
See accompanying notes to condensed consolidated financial statements.
3
BlackRock, Inc.
Condensed Consolidated Statements of Changes in Equity
(unaudited)
For the Six Months Ended June 30, 2023
(in millions) |
Additional |
|
|
Retained |
|
|
Accumulated |
|
|
Treasury |
|
|
Total |
|
|
Nonredeemable |
|
|
Total |
|
|
Redeemable |
|
||||||||
December 31, 2022 |
$ |
19,774 |
|
|
$ |
29,876 |
|
|
$ |
(1,101 |
) |
|
$ |
(10,805 |
) |
|
$ |
37,744 |
|
|
$ |
132 |
|
|
$ |
37,876 |
|
|
$ |
909 |
|
Net income |
|
— |
|
|
|
2,523 |
|
|
|
— |
|
|
|
— |
|
|
|
2,523 |
|
|
|
20 |
|
|
|
2,543 |
|
|
|
49 |
|
Dividends declared ($10.00 per share) |
|
— |
|
|
|
(1,544 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,544 |
) |
|
|
— |
|
|
|
(1,544 |
) |
|
|
— |
|
Stock-based compensation |
|
323 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
323 |
|
|
|
— |
|
|
|
323 |
|
|
|
— |
|
Issuance of common shares related to |
|
(524 |
) |
|
|
— |
|
|
|
— |
|
|
|
571 |
|
|
|
47 |
|
|
|
— |
|
|
|
47 |
|
|
|
— |
|
Employee tax withholdings related to |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(354 |
) |
|
|
(354 |
) |
|
|
— |
|
|
|
(354 |
) |
|
|
— |
|
Shares repurchased |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(752 |
) |
|
|
(752 |
) |
|
|
— |
|
|
|
(752 |
) |
|
|
— |
|
Subscriptions (redemptions/distributions) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10 |
) |
|
|
(10 |
) |
|
|
650 |
|
Net consolidations (deconsolidations) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(62 |
) |
Other comprehensive income (loss) |
|
— |
|
|
|
— |
|
|
|
221 |
|
|
|
— |
|
|
|
221 |
|
|
|
— |
|
|
|
221 |
|
|
|
— |
|
June 30, 2023 |
$ |
19,573 |
|
|
$ |
30,855 |
|
|
$ |
(880 |
) |
|
$ |
(11,340 |
) |
|
$ |
38,208 |
|
|
$ |
142 |
|
|
$ |
38,350 |
|
|
$ |
1,546 |
|
For the Three Months Ended June 30, 2023
(in millions) |
Additional |
|
|
Retained |
|
|
Accumulated |
|
|
Treasury |
|
|
Total |
|
|
Nonredeemable |
|
|
Total |
|
|
Redeemable |
|
||||||||
March 31, 2023 |
$ |
19,429 |
|
|
$ |
30,237 |
|
|
$ |
(975 |
) |
|
$ |
(10,979 |
) |
|
$ |
37,712 |
|
|
$ |
118 |
|
|
$ |
37,830 |
|
|
$ |
1,235 |
|
Net income |
|
— |
|
|
|
1,366 |
|
|
|
— |
|
|
|
— |
|
|
|
1,366 |
|
|
|
25 |
|
|
|
1,391 |
|
|
|
32 |
|
Dividends declared ($5.00 per share) |
|
— |
|
|
|
(748 |
) |
|
|
— |
|
|
|
— |
|
|
|
(748 |
) |
|
|
— |
|
|
|
(748 |
) |
|
|
— |
|
Stock-based compensation |
|
158 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
158 |
|
|
|
— |
|
|
|
158 |
|
|
|
— |
|
Issuance of common shares related to |
|
(14 |
) |
|
|
— |
|
|
|
— |
|
|
|
24 |
|
|
|
10 |
|
|
|
— |
|
|
|
10 |
|
|
|
— |
|
Employee tax withholdings related to |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8 |
) |
|
|
(8 |
) |
|
|
— |
|
|
|
(8 |
) |
|
|
— |
|
Shares repurchased |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(377 |
) |
|
|
(377 |
) |
|
|
— |
|
|
|
(377 |
) |
|
|
— |
|
Subscriptions (redemptions/distributions) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
|
336 |
|
Net consolidations (deconsolidations) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(57 |
) |
Other comprehensive income (loss) |
|
— |
|
|
|
— |
|
|
|
95 |
|
|
|
— |
|
|
|
95 |
|
|
|
— |
|
|
|
95 |
|
|
|
— |
|
June 30, 2023 |
$ |
19,573 |
|
|
$ |
30,855 |
|
|
$ |
(880 |
) |
|
$ |
(11,340 |
) |
|
$ |
38,208 |
|
|
$ |
142 |
|
|
$ |
38,350 |
|
|
$ |
1,546 |
|
See accompanying notes to condensed consolidated financial statements.
4
BlackRock, Inc.
Condensed Consolidated Statements of Changes in Equity
(unaudited)
For the Six Months Ended June 30, 2022
(in millions) |
Additional |
|
|
Retained |
|
|
Accumulated |
|
|
Treasury |
|
|
Total |
|
|
Nonredeemable |
|
|
Total |
|
|
Redeemable |
|
||||||||
December 31, 2021 |
$ |
19,642 |
|
|
$ |
27,688 |
|
|
$ |
(550 |
) |
|
$ |
(9,087 |
) |
|
$ |
37,693 |
|
|
$ |
113 |
|
|
$ |
37,806 |
|
|
$ |
1,087 |
|
Net income |
|
— |
|
|
|
2,513 |
|
|
|
— |
|
|
|
— |
|
|
|
2,513 |
|
|
|
(2 |
) |
|
|
2,511 |
|
|
|
(185 |
) |
Dividends declared ($9.76 per share) |
|
— |
|
|
|
(1,523 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,523 |
) |
|
|
— |
|
|
|
(1,523 |
) |
|
|
— |
|
Stock-based compensation |
|
376 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
376 |
|
|
|
— |
|
|
|
376 |
|
|
|
— |
|
Issuance of common shares related to |
|
(547 |
) |
|
|
— |
|
|
|
— |
|
|
|
561 |
|
|
|
14 |
|
|
|
— |
|
|
|
14 |
|
|
|
— |
|
Employee tax withholdings related to |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(443 |
) |
|
|
(443 |
) |
|
|
— |
|
|
|
(443 |
) |
|
|
— |
|
Shares repurchased |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,000 |
) |
|
|
(1,000 |
) |
|
|
— |
|
|
|
(1,000 |
) |
|
|
— |
|
Subscriptions (redemptions/distributions) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
2 |
|
|
|
425 |
|
Net consolidations (deconsolidations) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(224 |
) |
Other comprehensive income (loss) |
|
— |
|
|
|
— |
|
|
|
(541 |
) |
|
|
— |
|
|
|
(541 |
) |
|
|
— |
|
|
|
(541 |
) |
|
|
— |
|
June 30, 2022 |
$ |
19,471 |
|
|
$ |
28,678 |
|
|
$ |
(1,091 |
) |
|
$ |
(9,969 |
) |
|
$ |
37,089 |
|
|
$ |
113 |
|
|
$ |
37,202 |
|
|
$ |
1,103 |
|
For the Three Months Ended June 30, 2022
(in millions) |
Additional |
|
|
Retained |
|
|
Accumulated |
|
|
Treasury |
|
|
Total |
|
|
Nonredeemable |
|
|
Total |
|
|
Redeemable |
|
||||||||
March 31, 2022 |
$ |
19,304 |
|
|
$ |
28,338 |
|
|
$ |
(675 |
) |
|
$ |
(9,478 |
) |
|
$ |
37,489 |
|
|
$ |
107 |
|
|
$ |
37,596 |
|
|
$ |
1,263 |
|
Net income |
|
— |
|
|
|
1,077 |
|
|
|
— |
|
|
|
— |
|
|
|
1,077 |
|
|
|
(2 |
) |
|
|
1,075 |
|
|
|
(112 |
) |
Dividends declared ($4.88 per share) |
|
— |
|
|
|
(737 |
) |
|
|
— |
|
|
|
— |
|
|
|
(737 |
) |
|
|
— |
|
|
|
(737 |
) |
|
|
— |
|
Stock-based compensation |
|
175 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
175 |
|
|
|
— |
|
|
|
175 |
|
|
|
— |
|
Issuance of common shares related to |
|
(8 |
) |
|
|
— |
|
|
|
— |
|
|
|
16 |
|
|
|
8 |
|
|
|
— |
|
|
|
8 |
|
|
|
— |
|
Employee tax withholdings related to |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7 |
) |
|
|
(7 |
) |
|
|
— |
|
|
|
(7 |
) |
|
|
— |
|
Shares repurchased |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(500 |
) |
|
|
(500 |
) |
|
|
— |
|
|
|
(500 |
) |
|
|
— |
|
Subscriptions (redemptions/distributions) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8 |
|
|
|
8 |
|
|
|
53 |
|
Net consolidations (deconsolidations) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(101 |
) |
Other comprehensive income (loss) |
|
— |
|
|
|
— |
|
|
|
(416 |
) |
|
|
— |
|
|
|
(416 |
) |
|
|
— |
|
|
|
(416 |
) |
|
|
— |
|
June 30, 2022 |
$ |
19,471 |
|
|
$ |
28,678 |
|
|
$ |
(1,091 |
) |
|
$ |
(9,969 |
) |
|
$ |
37,089 |
|
|
$ |
113 |
|
|
$ |
37,202 |
|
|
$ |
1,103 |
|
See accompanying notes to condensed consolidated financial statements.
5
BlackRock, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
|
Six Months Ended |
|
|||||
|
|
June 30, |
|
|||||
(in millions) |
|
2023 |
|
|
2022 |
|
||
Operating activities |
|
|
|
|
|
|
||
Net income |
|
$ |
2,592 |
|
|
$ |
2,326 |
|
Adjustments to reconcile net income to net cash provided by/(used in) operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
208 |
|
|
|
199 |
|
Noncash lease expense |
|
|
77 |
|
|
|
82 |
|
Stock-based compensation |
|
|
323 |
|
|
|
376 |
|
Deferred income tax expense (benefit) |
|
|
58 |
|
|
|
12 |
|
Net (gains) losses within CIPs |
|
|
(167 |
) |
|
|
388 |
|
Net (purchases) proceeds within CIPs |
|
|
(947 |
) |
|
|
(590 |
) |
(Earnings) losses from equity method investees |
|
|
(191 |
) |
|
|
57 |
|
Distributions of earnings from equity method investees |
|
|
18 |
|
|
|
32 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
(472 |
) |
|
|
216 |
|
Investments, trading |
|
|
12 |
|
|
|
115 |
|
Other assets |
|
|
(2,337 |
) |
|
|
(1,224 |
) |
Accrued compensation and benefits |
|
|
(875 |
) |
|
|
(1,582 |
) |
Accounts payable and accrued liabilities |
|
|
(110 |
) |
|
|
(118 |
) |
Other liabilities |
|
|
2,402 |
|
|
|
934 |
|
Net cash provided by/(used in) operating activities |
|
|
591 |
|
|
|
1,223 |
|
Investing activities |
|
|
|
|
|
|
||
Purchases of investments |
|
|
(584 |
) |
|
|
(383 |
) |
Proceeds from sales and maturities of investments |
|
|
179 |
|
|
|
117 |
|
Distributions of capital from equity method investees |
|
|
17 |
|
|
|
34 |
|
Net consolidations (deconsolidations) of sponsored investment funds |
|
|
27 |
|
|
|
(5 |
) |
Purchases of property and equipment |
|
|
(142 |
) |
|
|
(263 |
) |
Net cash provided by/(used in) investing activities |
|
|
(503 |
) |
|
|
(500 |
) |
Financing activities |
|
|
|
|
|
|
||
Repayments of long-term borrowings |
|
|
— |
|
|
|
(750 |
) |
Proceeds from long-term borrowings |
|
|
1,238 |
|
|
|
— |
|
Cash dividends paid |
|
|
(1,544 |
) |
|
|
(1,523 |
) |
Proceeds from stock options exercised |
|
|
27 |
|
|
|
— |
|
Repurchases of common stock |
|
|
(1,104 |
) |
|
|
(1,443 |
) |
Net proceeds from (repayments of) borrowings by CIPs |
|
|
(23 |
) |
|
|
— |
|
Net subscriptions received/(redemptions/distributions paid) from noncontrolling interest holders |
|
|
640 |
|
|
|
427 |
|
Other financing activities |
|
|
12 |
|
|
|
17 |
|
Net cash provided by/(used in) financing activities |
|
|
(754 |
) |
|
|
(3,272 |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
84 |
|
|
|
(293 |
) |
Net increase/(decrease) in cash, cash equivalents and restricted cash |
|
|
(582 |
) |
|
|
(2,842 |
) |
Cash, cash equivalents and restricted cash, beginning of period |
|
|
7,433 |
|
|
|
9,340 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
6,851 |
|
|
$ |
6,498 |
|
Supplemental schedule of noncash investing and financing transactions: |
|
|
|
|
|
|
||
Issuance of common stock |
|
$ |
524 |
|
|
$ |
547 |
|
Increase (decrease) in noncontrolling interests due to net consolidation (deconsolidation) of |
|
$ |
(62 |
) |
|
$ |
(224 |
) |
See accompanying notes to condensed consolidated financial statements.
6
BlackRock, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
1. Business Overview
BlackRock, Inc. (together, with its subsidiaries, unless the context otherwise indicates, “BlackRock” or the “Company”) is a leading publicly traded investment management firm providing a broad range of investment management and technology services to institutional and retail clients worldwide.
BlackRock’s diverse platform of alpha-seeking active, index and cash management investment strategies across asset classes enables the Company to offer choice and tailor investment and asset allocation solutions for clients. Product offerings include single- and multi-asset portfolios investing in equities, fixed income, alternatives and money market instruments. Products are offered directly and through intermediaries in a variety of vehicles, including open-end and closed-end mutual funds, iShares® and BlackRock exchange-traded funds (“ETFs”), separate accounts, collective trust funds and other pooled investment vehicles. BlackRock also offers technology services, including the investment and risk management technology platform, Aladdin®, Aladdin Wealth, eFront and Cachematrix, as well as advisory services and solutions to a broad base of institutional and wealth management clients.
2. Significant Accounting Policies
Basis of Presentation
These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company and its controlled subsidiaries. Noncontrolling interests (“NCI”) on the condensed consolidated statements of financial condition represent the portion of consolidated sponsored investment products (“CIPs”) and a consolidated affiliate (collectively, “consolidated entities”) in which the Company does not have direct equity ownership. Intercompany balances and transactions have been eliminated upon consolidation.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting periods. Actual results could differ from those estimates.
Certain financial information that normally is included in annual financial statements, including certain financial statement footnotes, is not required for interim reporting purposes and has been condensed or omitted herein. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and footnotes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission (“SEC”) on February 24, 2023 (“2022 Form 10-K”).
The interim financial information at June 30, 2023 and for the three and six months ended June 30, 2023 and 2022 is unaudited. However, in the opinion of management, the interim information includes all normal recurring adjustments necessary for the fair presentation of the Company’s results for the periods presented. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year.
Fair Value Measurements
Hierarchy of Fair Value Inputs. The Company uses a fair value hierarchy that prioritizes inputs to valuation approaches used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories:
Level 1 Inputs:
Quoted prices (unadjusted) in active markets for identical assets or liabilities at the reporting date.
7
Level 2 Inputs:
Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities that are not active; quotes from pricing services or brokers for which the Company can determine that orderly transactions took place at the quoted price or that the inputs used to arrive at the price are observable; and inputs other than quoted prices that are observable, such as models or other valuation methodologies.
Level 3 Inputs:
Unobservable inputs for the valuation of the asset or liability, which may include nonbinding broker quotes. Level 3 assets include investments for which there is little, if any, market activity. These inputs require significant management judgment or estimation.
Significance of Inputs. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.
Valuation Approaches. The fair values of certain Level 3 assets and liabilities were determined using various valuation approaches as appropriate, including third-party pricing vendors, broker quotes and market and income approaches.
A significant number of inputs used to value equity, debt securities, and bank loans held within CLOs and CIPs are sourced from third-party pricing vendors. Generally, prices obtained from pricing vendors are categorized as Level 1 inputs for identical securities traded in active markets and as Level 2 for other similar securities if the vendor uses observable inputs in determining the price.
In addition, quotes obtained from brokers generally are nonbinding and categorized as Level 3 inputs. However, if the Company is able to determine that market participants have transacted for the asset in an orderly manner near the quoted price or if the Company can determine that the inputs used by the broker are observable, the quote is classified as a Level 2 input.
Investments Measured at Net Asset Values. As a practical expedient, the Company uses net asset value (“NAV”) as the fair value for certain investments. The inputs to value these investments may include the Company’s capital accounts for its partnership interests in various alternative investments, including hedge funds, real assets and private equity funds, which may be adjusted by using the returns of certain market indices. The various partnerships generally are investment companies, which record their underlying investments at fair value based on fair value policies established by management of the underlying fund. Fair value policies at the underlying fund generally require the fund to utilize pricing/valuation information from third-party sources, including independent appraisals. However, in some instances, current valuation information for illiquid securities or securities in markets that are not active may not be available from any third-party source or fund management may conclude that the valuations that are available from third-party sources are not reliable. In these instances, fund management may perform model-based analytical valuations that could be used as an input to value these investments.
Fair Value Assets and Liabilities of Consolidated CLO. The Company applies the fair value option provisions for eligible assets, including bank loans, held by a consolidated CLO. As the fair value of the financial assets of the consolidated CLO is more observable than the fair value of the borrowings of the consolidated CLO, the Company measures the fair value of the borrowings of the consolidated CLO equal to the fair value of the assets of the consolidated CLO less the fair value of the Company’s economic interest in the CLO.
Derivatives and Hedging Activities. The Company does not use derivative financial instruments for trading or speculative purposes. The Company uses derivative financial instruments primarily for purposes of hedging exposures to fluctuations in foreign currency exchange rates of certain assets and liabilities, and market price and interest rate exposures with respect to its total portfolio of seed investments in sponsored investment products. Certain CIPs also utilize derivatives as a part of their investment strategy.
8
In addition, during 2023, the Company acquired both investments and derivatives to economically hedge market valuation changes on certain deferred cash compensation plans, for which the final value of the deferred amount distributed to employees in cash upon vesting is determined based on the returns on specified investment funds. The Company recognizes compensation expense for the appreciation (depreciation) of the deferred cash compensation liability in proportion to the vested amount of the award during a respective period, while the gain (loss) to economically hedge these plans is immediately recognized in nonoperating income (expense). See Note 4, Investments, and Note 8, Derivatives and Hedging, for further information on the Company’s investments and derivatives, respectively, used to economically hedge certain deferred cash compensation plans.
The Company records all derivative financial instruments as either assets or liabilities at fair value on a gross basis in the condensed consolidated statements of financial condition. Credit risks are managed through master netting and collateral support agreements. The amounts related to the right to reclaim or the obligation to return cash collateral may not be used to offset amounts due under the derivative instruments in the normal course of settlement. Therefore, such amounts are not offset against fair value amounts recognized for derivative instruments with the same counterparty and are included in other assets and other liabilities. Changes in the fair value of the Company’s derivative financial instruments are recognized in earnings and, where applicable, are offset by the corresponding gain or loss on the related foreign-denominated assets or liabilities or hedged investments, on the condensed consolidated statements of income.
The Company may also use financial instruments designated as net investment hedges for accounting purposes to hedge net investments in international subsidiaries whose functional currency is not United States ("US") dollars. The gain or loss from revaluing net investment hedges at the spot rate is deferred and reported within accumulated other comprehensive income (loss) (“AOCI”) on the condensed consolidated statements of financial condition. The Company reassesses the effectiveness of its net investment hedge at least quarterly.
Separate Account Assets and Liabilities. Separate account assets are maintained by BlackRock Life Limited, a wholly owned subsidiary of the Company, which is a registered life insurance company in the United Kingdom (“UK”), and represent segregated assets held for purposes of funding individual and group pension contracts. The life insurance company does not underwrite any insurance contracts that involve any insurance risk transfer from the insured to the life insurance company. The separate account assets primarily include equity securities, debt securities, money market funds and derivatives. The separate account assets are not subject to general claims of the creditors of BlackRock. These separate account assets and the related equal and offsetting liabilities are recorded as separate account assets and separate account liabilities on the condensed consolidated statements of financial condition.
The net investment income attributable to separate account assets supporting individual and group pension contracts accrues directly to the contract owner and is not reported on the condensed consolidated statements of income. While BlackRock has no economic interest in these separate account assets and liabilities, BlackRock earns policy administration and management fees associated with these products, which are included in investment advisory, administration fees and securities lending revenue on the condensed consolidated statements of income.
Separate Account Collateral Assets Held and Liabilities Under Securities Lending Agreements. The Company facilitates securities lending arrangements whereby securities held by separate accounts maintained by BlackRock Life Limited are lent to third parties under global master securities lending agreements. In exchange, the Company obtains either (1) the legal title, or (2) a first ranking priority security interest, in the collateral. The minimum collateral values generally range from approximately 102% to 112% of the value of the securities in order to reduce counterparty risk. The required collateral value is calculated on a daily basis. The global master securities lending agreements provide the Company the right to request additional collateral or, in the event of borrower default, the right to liquidate collateral. The securities lending transactions entered into by the Company are accompanied by an agreement that entitles the Company to request the borrower to return the securities at any time; therefore, these transactions are not reported as sales.
9
In situations where the Company obtains the legal title to collateral under these securities lending arrangements, the Company records an asset on the condensed consolidated statements of financial condition in addition to an equal collateral liability for the obligation to return the collateral. Additionally, in situations where the Company obtains a first ranking priority security interest in the collateral, the Company does not have the ability to pledge or resell the collateral and therefore does not record the collateral on the condensed consolidated statements of financial condition. At June 30, 2023 and December 31, 2022, the fair value of loaned securities held by separate accounts was approximately $9.9 billion and $10.2 billion, respectively, and the fair value of the collateral under these securities lending agreements was approximately $10.9 billion and $11.0 billion, respectively, of which approximately $5.8 billion as of June 30, 2023 and $5.8 billion as of December 31, 2022 was recognized on the condensed consolidated statements of financial condition. During the six months ended June 30, 2023 and 2022, the Company had not resold or repledged any of the collateral obtained under these arrangements. The securities lending revenue earned from lending securities held by the separate accounts is included in investment advisory, administration fees and securities lending revenue on the condensed consolidated statements of income.
Property and Equipment. Property and equipment are recorded at cost less accumulated depreciation. Depreciation is generally determined by cost less any estimated residual value using the straight-line method over the estimated useful lives of the various classes of property and equipment. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life or the remaining lease term. During the six months ended June 30, 2023, BlackRock reclassed approximately $400 million from construction in progress to leasehold improvements primarily related to its new headquarters located at 50 Hudson Yards in New York.
Money Market Fee Waivers. The Company may voluntarily waive a portion of its management fees on certain money market funds to ensure that they maintain a targeted level of daily net investment income (the “Yield Support waivers”). There were no Yield Support waivers during the three and six months ended June 30, 2023 and during the three months ended June 30, 2022. During the six months ended June 30, 2022 Yield Support waivers resulted in a reduction of management fees of approximately $72 million. The reduction in management fees was partially offset by a reduction of BlackRock’s distribution and servicing costs paid to financial intermediaries. The Company may increase or decrease the level of Yield Support waivers in future periods.
10
3. Cash, Cash Equivalents, and Restricted Cash
The following table provides a reconciliation of cash and cash equivalents reported within the condensed consolidated statements of financial condition to the cash, cash equivalents, and restricted cash reported within the condensed consolidated statements of cash flows.
|
|
June 30, |
|
|
December 31, |
|
||
(in millions) |
|
2023 |
|
|
2022 |
|
||
Cash and cash equivalents |
|
$ |
6,834 |
|
|
$ |
7,416 |
|
Restricted cash included in other assets |
|
|
17 |
|
|
|
17 |
|
Total cash, cash equivalents and restricted cash |
|
$ |
6,851 |
|
|
$ |
7,433 |
|
4. Investments
A summary of the carrying value of total investments is as follows:
|
June 30, |
|
|
December 31, |
|
||
(in millions) |
2023 |
|
|
2022 |
|
||
Debt securities: |
|
|
|
|
|
||
Trading securities (including $1,759 and $1,279 held by CIPs at |
$ |
1,800 |
|
|
$ |
1,331 |
|
Held-to-maturity investments |
|
618 |
|
|
|
544 |
|
Total debt securities |
|
2,418 |
|
|
|
1,875 |
|
Equity securities at FVTNI (including $1,386 and $1,089 held by CIPs at |
|
1,526 |
|
|
|
1,211 |
|
Equity method investments: |
|
|
|
|
|
||
Equity method investments(2) |
|
2,091 |
|
|
|
1,895 |
|
Deferred cash compensation plan - equity method investments(1) |
|
249 |
|
|
|
— |
|
Total equity method investments |
|
2,340 |
|
|
|
1,895 |
|
Bank loans held by CIPs |
|
370 |
|
|
|
354 |
|
Federal Reserve Bank stock(3) |
|
91 |
|
|
|
91 |
|
Carried interest(4) |
|
1,699 |
|
|
|
1,550 |
|
Other investments(1)(5) |
|
680 |
|
|
|
490 |
|
Total investments |
$ |
9,124 |
|
|
$ |
7,466 |
|
Held-to-Maturity Investments
Held-to-maturity investments included certain investments in BlackRock sponsored CLOs. The amortized cost (carrying value) of these investments approximated fair value (primarily a Level 2 input). At June 30, 2023, $33 million of these investments mature between one to five years, $284 million of these investments mature between five to ten years and $301 million of these investments mature after ten years.
11
Trading Debt Securities and Equity Securities at FVTNI
A summary of the cost and carrying value of trading debt securities and equity securities at FVTNI is as follows:
|
|
|
|
|
|
|
|
|
|||||||
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||||||||||
(in millions) |
Cost |
|
|
Carrying |
|
|
Cost |
|
|
Carrying |
|
||||
Trading debt securities: |
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt |
$ |
1,195 |
|
|
$ |
1,132 |
|
|
$ |
823 |
|
|
$ |
795 |
|
Government debt |
|
526 |
|
|
|
489 |
|
|
|
420 |
|
|
|
400 |
|
Asset/mortgage-backed debt |
|
197 |
|
|
|
179 |
|
|
|
154 |
|
|
|
136 |
|
Total trading debt securities |
$ |
1,918 |
|
|
$ |
1,800 |
|
|
$ |
1,397 |
|
|
$ |
1,331 |
|
Equity securities at FVTNI: |
|
|
|
|
|
|
|
|
|
|
|
||||
Equity securities/mutual funds |
$ |
1,415 |
|
|
$ |
1,526 |
|
|
$ |
1,216 |
|
|
$ |
1,211 |
|
5. Consolidated Sponsored Investment Products
The Company consolidates certain sponsored investment funds accounted for as voting rights entities (“VREs”) because it is deemed to control such funds.
In the normal course of business, the Company is the manager of various types of sponsored investment vehicles, which may be considered VIEs. The Company may from time to time own equity or debt securities or enter into derivatives or loan arrangements with the vehicles, each of which are considered variable interests. The Company’s involvement in financing the operations of the VIEs is generally limited to its investments in the entity. The Company’s consolidated VIEs include certain sponsored investment products in which BlackRock has an economic interest and as the investment manager, is deemed to have both the power to direct the most significant activities of the products and the right to receive benefits (or the obligation to absorb losses) that could potentially be significant to these sponsored investment products. The assets of these VIEs are not available to creditors of the Company. In addition, the investors in these VIEs have no recourse to the credit of the Company.
The following table presents the balances related to these CIPs accounted for as VIEs and VREs that were recorded on the condensed consolidated statements of financial condition, including BlackRock’s net interest in these products:
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||||||||||||||||||
(in millions) |
|
VIEs |
|
|
VREs |
|
|
Total |
|
|
VIEs |
|
|
VREs |
|
|
Total |
|
||||||
Cash and cash equivalents(1) |
|
$ |
208 |
|
|
$ |
48 |
|
|
$ |
256 |
|
|
$ |
234 |
|
|
$ |
31 |
|
|
$ |
265 |
|
Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Trading debt securities |
|
|
1,283 |
|
|
|
476 |
|
|
|
1,759 |
|
|
|
949 |
|
|
|
330 |
|
|
|
1,279 |
|
Equity securities at FVTNI |
|
|
968 |
|
|
|
418 |
|
|
|
1,386 |
|
|
|
821 |
|
|
|
268 |
|
|
|
1,089 |
|
Bank loans |
|
|
218 |
|
|
|
152 |
|
|
|
370 |
|
|
|
234 |
|
|
|
120 |
|
|
|
354 |
|
Other investments |
|
|
543 |
|
|
|
98 |
|
|
|
641 |
|
|
|
373 |
|
|
|
77 |
|
|
|
450 |
|
Carried interest |
|
|
1,649 |
|
|
|
— |
|
|
|
1,649 |
|
|
|
1,497 |
|
|
|
— |
|
|
|
1,497 |
|
Total investments |
|
|
4,661 |
|
|
|
1,144 |
|
|
|
5,805 |
|
|
|
3,874 |
|
|
|
795 |
|
|
|
4,669 |
|
Other assets |
|
|
68 |
|
|
|
36 |
|
|
|
104 |
|
|
|
68 |
|
|
|
29 |
|
|
|
97 |
|
Other liabilities(2) |
|
|
(1,993 |
) |
|
|
(78 |
) |
|
|
(2,071 |
) |
|
|
(1,876 |
) |
|
|
(48 |
) |
|
|
(1,924 |
) |
Noncontrolling interest - CIPs |
|
|
(1,372 |
) |
|
|
(264 |
) |
|
|
(1,636 |
) |
|
|
(857 |
) |
|
|
(125 |
) |
|
|
(982 |
) |
BlackRock's net interest in CIPs |
|
$ |
1,572 |
|
|
$ |
886 |
|
|
$ |
2,458 |
|
|
$ |
1,443 |
|
|
$ |
682 |
|
|
$ |
2,125 |
|
12
BlackRock’s total exposure to CIPs represents the value of its economic ownership interest in these CIPs. Valuation changes associated with investments held at fair value by these CIPs are reflected in nonoperating income (expense) and partially offset in net income (loss) attributable to NCI for the portion not attributable to BlackRock.
Net gain (loss) related to consolidated VIEs is presented in the following table:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Nonoperating net gain (loss) on consolidated VIEs |
|
$ |
80 |
|
|
$ |
(183 |
) |
|
$ |
139 |
|
|
$ |
(316 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to NCI on consolidated VIEs |
|
$ |
61 |
|
|
$ |
(108 |
) |
|
$ |
73 |
|
|
$ |
(183 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
6. Variable Interest Entities
Nonconsolidated VIEs. At June 30, 2023 and December 31, 2022, the Company’s carrying value of assets and liabilities included on the condensed consolidated statements of financial condition pertaining to nonconsolidated VIEs and its maximum risk of loss related to VIEs for which it held a variable interest, but for which it was not the primary beneficiary, was as follows:
|
|
|
|
Advisory Fee |
|
|
Other Net Assets |
|
|
Maximum |
|
||||
(in millions) |
Investments |
|
|
Receivables |
|
|
(Liabilities) |
|
|
Risk of Loss(1) |
|
||||
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
||||
Sponsored investment |
$ |
1,205 |
|
|
$ |
117 |
|
|
$ |
(11 |
) |
|
$ |
1,339 |
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
||||
Sponsored investment |
$ |
1,060 |
|
|
$ |
95 |
|
|
$ |
(12 |
) |
|
$ |
1,172 |
|
The net assets of sponsored investment products that are nonconsolidated VIEs approximated $23 billion and $19 billion at June 30, 2023 and December 31, 2022, respectively.
13
7. Fair Value Disclosures
Fair Value Hierarchy
Assets and liabilities measured at fair value on a recurring basis
June 30, 2023 |
Quoted Prices |
|
|
Significant |
|
|
Significant |
|
|
Investments |
|
|
Other(2) |
|
|
June 30, |
|
||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Trading securities |
$ |
— |
|
|
$ |
1,759 |
|
|
$ |
41 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,800 |
|
Held-to-maturity investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
618 |
|
|
|
618 |
|
Total debt securities |
|
— |
|
|
|
1,759 |
|
|
|
41 |
|
|
|
— |
|
|
|
618 |
|
|
|
2,418 |
|
Equity securities at FVTNI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity securities/mutual funds |
|
1,526 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,526 |
|
Equity method: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity, fixed income, and multi-asset |
|
149 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
149 |
|
Hedge funds/funds of hedge |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
462 |
|
|
|
— |
|
|
|
462 |
|
Private equity funds |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,119 |
|
|
|
— |
|
|
|
1,119 |
|
Real assets funds |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
361 |
|
|
|
— |
|
|
|
361 |
|
Deferred cash compensation plan |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
249 |
|
|
|
— |
|
|
|
249 |
|
Total equity method |
|
149 |
|
|
|
— |
|
|
|
— |
|
|
|
2,191 |
|
|
|
— |
|
|
|
2,340 |
|
Bank loans |
|
— |
|
|
|
104 |
|
|
|
266 |
|
|
|
— |
|
|
|
— |
|
|
|
370 |
|
Federal Reserve Bank Stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
91 |
|
|
|
91 |
|
Carried interest |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,699 |
|
|
|
1,699 |
|
Other investments |
|
55 |
|
|
|
— |
|
|
|
— |
|
|
|
475 |
|
|
|
150 |
|
|
|
680 |
|
Total investments |
|
1,730 |
|
|
|
1,863 |
|
|
|
307 |
|
|
|
2,666 |
|
|
|
2,558 |
|
|
|
9,124 |
|
Other assets(3) |
|
140 |
|
|
|
2 |
|
|
|
109 |
|
|
|
— |
|
|
|
— |
|
|
|
251 |
|
Separate account assets |
|
35,290 |
|
|
|
19,242 |
|
|
|
— |
|
|
|
— |
|
|
|
587 |
|
|
|
55,119 |
|
Separate account collateral held under |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity securities |
|
3,043 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,043 |
|
Debt securities |
|
— |
|
|
|
2,768 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,768 |
|
Total separate account collateral held |
|
3,043 |
|
|
|
2,768 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,811 |
|
Total |
$ |
40,203 |
|
|
$ |
23,875 |
|
|
$ |
416 |
|
|
$ |
2,666 |
|
|
$ |
3,145 |
|
|
$ |
70,305 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Separate account collateral |
$ |
3,043 |
|
|
$ |
2,768 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,811 |
|
Other liabilities(4) |
|
— |
|
|
|
15 |
|
|
|
254 |
|
|
|
— |
|
|
|
— |
|
|
|
269 |
|
Total |
$ |
3,043 |
|
|
$ |
2,783 |
|
|
$ |
254 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
6,080 |
|
14
December 31, 2022 |
Quoted Prices |
|
|
Significant |
|
|
Significant |
|
|
Investments |
|
|
Other(2) |
|
|
December 31, |
|
||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Trading securities |
$ |
— |
|
|
$ |
1,279 |
|
|
$ |
52 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,331 |
|
Held-to-maturity investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
544 |
|
|
|
544 |
|
Total debt securities |
|
— |
|
|
|
1,279 |
|
|
|
52 |
|
|
|
— |
|
|
|
544 |
|
|
|
1,875 |
|
Equity securities at FVTNI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity securities/mutual funds |
|
1,211 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,211 |
|
Equity method: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity, fixed income, and multi-asset |
|
181 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
181 |
|
Hedge funds/funds of hedge |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
525 |
|
|
|
— |
|
|
|
525 |
|
Private equity funds |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
885 |
|
|
|
— |
|
|
|
885 |
|
Real assets funds |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
304 |
|
|
|
— |
|
|
|
304 |
|
Total equity method |
|
181 |
|
|
|
— |
|
|
|
— |
|
|
|
1,714 |
|
|
|
— |
|
|
|
1,895 |
|
Bank loans |
|
— |
|
|
|
106 |
|
|
|
248 |
|
|
|
— |
|
|
|
— |
|
|
|
354 |
|
Federal Reserve Bank Stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
91 |
|
|
|
91 |
|
Carried interest |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,550 |
|
|
|
1,550 |
|
Other investments |
|
28 |
|
|
|
— |
|
|
|
— |
|
|
|
316 |
|
|
|
146 |
|
|
|
490 |
|
Total investments |
|
1,420 |
|
|
|
1,385 |
|
|
|
300 |
|
|
|
2,030 |
|
|
|
2,331 |
|
|
|
7,466 |
|
Other assets(3) |
|
145 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
146 |
|
Separate account assets |
|
34,823 |
|
|
|
18,544 |
|
|
|
— |
|
|
|
— |
|
|
|
699 |
|
|
|
54,066 |
|
Separate account collateral held under |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity securities |
|
2,163 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,163 |
|
Debt securities |
|
— |
|
|
|
3,602 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,602 |
|
Total separate account collateral held |
|
2,163 |
|
|
|
3,602 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,765 |
|
Total |
$ |
38,551 |
|
|
$ |
23,532 |
|
|
$ |
300 |
|
|
$ |
2,030 |
|
|
$ |
3,030 |
|
|
$ |
67,443 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Separate account collateral |
$ |
2,163 |
|
|
$ |
3,602 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,765 |
|
Other liabilities(4) |
|
— |
|
|
|
31 |
|
|
|
280 |
|
|
|
— |
|
|
|
— |
|
|
|
311 |
|
Total |
$ |
2,163 |
|
|
$ |
3,633 |
|
|
$ |
280 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
6,076 |
|
15
Level 3 Assets. Level 3 assets predominantly include investments in CLOs, bank loans of consolidated CIPs, and a strategic private debt investment. Investments in CLOs and bank loans were valued based on single-broker nonbinding quotes or quotes from pricing services which use significant unobservable inputs. BlackRock's strategic private debt investment was valued using the income approach by discounting the expected cash flows to a single present value. For investments utilizing a discounted cashflow valuation technique, an increase (decrease) in the discount rate or risk premium in isolation could have resulted in a significantly lower (higher) fair value measurement as of June 30, 2023.
Level 3 Liabilities. Level 3 liabilities primarily include borrowings of a consolidated CLO, which were valued based on the fair value of the assets of the consolidated CLO less the fair value of the Company’s economic interest in the CLO, as well as contingent liabilities related to certain acquisitions, which were valued based upon discounted cash flow analyses using unobservable market data inputs.
Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended June 30, 2023
(in millions) |
|
March 31, |
|
|
Realized |
|
|
Purchases |
|
|
Sales and |
|
|
Issuances and |
|
|
Transfers |
|
|
Transfers |
|
|
June 30, |
|
|
Total Net |
|
|||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Trading |
|
$ |
55 |
|
|
$ |
(1 |
) |
|
$ |
4 |
|
|
$ |
(17 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
41 |
|
|
$ |
(1 |
) |
Total debt securities |
|
|
55 |
|
|
|
(1 |
) |
|
|
4 |
|
|
|
(17 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
41 |
|
|
|
(1 |
) |
Bank loans |
|
|
247 |
|
|
|
17 |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
5 |
|
|
|
(2 |
) |
|
|
266 |
|
|
|
17 |
|
Total investments |
|
|
302 |
|
|
|
16 |
|
|
|
4 |
|
|
|
(18 |
) |
|
|
— |
|
|
|
5 |
|
|
|
(2 |
) |
|
|
307 |
|
|
|
16 |
|
Other assets |
|
|
— |
|
|
|
— |
|
|
|
109 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
109 |
|
|
|
— |
|
Total assets |
|
$ |
302 |
|
|
$ |
16 |
|
|
$ |
113 |
|
|
$ |
(18 |
) |
|
$ |
— |
|
|
$ |
5 |
|
|
$ |
(2 |
) |
|
$ |
416 |
|
|
$ |
16 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other liabilities |
|
$ |
257 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(3 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
254 |
|
|
$ |
— |
|
Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Six Months Ended June 30, 2023
(in millions) |
|
December 31, |
|
|
Realized |
|
|
Purchases |
|
|
Sales and |
|
|
Issuances and |
|
|
Transfers |
|
|
Transfers |
|
|
June 30, |
|
|
Total Net |
|
|||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Trading |
|
$ |
52 |
|
|
$ |
— |
|
|
$ |
6 |
|
|
$ |
(17 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
41 |
|
|
$ |
— |
|
Total debt securities |
|
|
52 |
|
|
|
— |
|
|
|
6 |
|
|
|
(17 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
41 |
|
|
|
— |
|
Bank loans |
|
|
248 |
|
|
|
23 |
|
|
|
12 |
|
|
|
(21 |
) |
|
|
— |
|
|
|
10 |
|
|
|
(6 |
) |
|
|
266 |
|
|
|
23 |
|
Total investments |
|
|
300 |
|
|
|
23 |
|
|
|
18 |
|
|
|
(38 |
) |
|
|
— |
|
|
|
10 |
|
|
|
(6 |
) |
|
|
307 |
|
|
|
23 |
|
Other assets |
|
|
— |
|
|
|
— |
|
|
|
109 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
109 |
|
|
|
— |
|
Total assets |
|
$ |
300 |
|
|
$ |
23 |
|
|
$ |
127 |
|
|
$ |
(38 |
) |
|
$ |
— |
|
|
$ |
10 |
|
|
$ |
(6 |
) |
|
$ |
416 |
|
|
$ |
23 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other liabilities |
|
$ |
280 |
|
|
$ |
4 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(22 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
254 |
|
|
$ |
4 |
|
16
Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended June 30, 2022
(in millions) |
|
March 31, |
|
|
Realized |
|
|
Purchases |
|
|
Sales and |
|
|
Issuances and |
|
|
Transfers |
|
|
Transfers |
|
|
June 30, |
|
|
Total Net |
|
|||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Trading |
|
$ |
8 |
|
|
$ |
(3 |
) |
|
$ |
13 |
|
|
$ |
(1 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(1 |
) |
|
$ |
16 |
|
|
$ |
(3 |
) |
Total debt securities |
|
|
8 |
|
|
|
(3 |
) |
|
|
13 |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
16 |
|
|
|
(3 |
) |
Private equity |
|
|
4 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
— |
|
Bank loans |
|
|
264 |
|
|
|
(3 |
) |
|
|
8 |
|
|
|
(18 |
) |
|
|
— |
|
|
|
4 |
|
|
|
(3 |
) |
|
|
252 |
|
|
|
(3 |
) |
Total investments |
|
$ |
276 |
|
|
$ |
(6 |
) |
|
$ |
21 |
|
|
$ |
(19 |
) |
|
$ |
— |
|
|
$ |
4 |
|
|
$ |
(4 |
) |
|
$ |
272 |
|
|
$ |
(6 |
) |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other liabilities |
|
$ |
312 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
314 |
|
|
$ |
— |
|
Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Six Months Ended June 30, 2022
(in millions) |
|
December 31, |
|
|
Realized |
|
|
Purchases |
|
|
Sales and |
|
|
Issuances and |
|
|
Transfers |
|
|
Transfers |
|
|
June 30, |
|
|
Total Net |
|
|||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Trading |
|
$ |
17 |
|
|
$ |
(3 |
) |
|
$ |
19 |
|
|
$ |
(13 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(4 |
) |
|
$ |
16 |
|
|
$ |
(3 |
) |
Total debt securities |
|
|
17 |
|
|
|
(3 |
) |
|
|
19 |
|
|
|
(13 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
|
|
16 |
|
|
|
(3 |
) |
Private equity |
|
|
5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
4 |
|
|
|
— |
|
Bank loans |
|
|
270 |
|
|
|
(3 |
) |
|
|
16 |
|
|
|
(18 |
) |
|
|
— |
|
|
|
4 |
|
|
|
(17 |
) |
|
|
252 |
|
|
|
(3 |
) |
Total investments |
|
$ |
292 |
|
|
$ |
(6 |
) |
|
$ |
35 |
|
|
$ |
(31 |
) |
|
$ |
— |
|
|
$ |
4 |
|
|
$ |
(22 |
) |
|
$ |
272 |
|
|
$ |
(6 |
) |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other liabilities |
|
$ |
342 |
|
|
$ |
(1 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(29 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
314 |
|
|
$ |
(1 |
) |
Realized and Unrealized Gains (Losses) for Level 3 Assets and Liabilities. Realized and unrealized gains (losses) recorded for Level 3 assets and liabilities are reported in nonoperating income (expense) on the condensed consolidated statements of income. A portion of net income (loss) related to securities held by CIPs is allocated to NCI to reflect net income (loss) not attributable to the Company.
Transfers in and/or out of Levels. Transfers in and/or out of levels are reflected when significant inputs, including market inputs or performance attributes, used for the fair value measurement become observable/unobservable.
17
Disclosures of Fair Value for Financial Instruments Not Held at Fair Value. At June 30, 2023 and December 31, 2022, the fair value of the Company’s financial instruments not held at fair value are categorized in the table below:
|
June 30, 2023 |
|
|
December 31, 2022 |
|
|
|
|
||||||||||
(in millions) |
Carrying |
|
|
Estimated |
|
|
Carrying |
|
|
Estimated |
|
|
Fair Value |
|
||||
Financial Assets(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
$ |
6,834 |
|
|
$ |
6,834 |
|
|
$ |
7,416 |
|
|
$ |
7,416 |
|
|
Level 1 |
(2)(3) |
Other assets |
$ |
89 |
|
|
$ |
89 |
|
|
$ |
86 |
|
|
$ |
86 |
|
|
Level 1 |
(2)(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term borrowings |
$ |
7,904 |
|
|
$ |
7,211 |
|
|
$ |
6,654 |
|
|
$ |
5,949 |
|
|
Level 2 |
(5) |
18
Investments in Certain Entities that Calculate NAV Per Share
As a practical expedient to value certain investments that do not have a readily determinable fair value and have attributes of an investment company, the Company uses NAV as the fair value. The following tables list information regarding all investments that use a fair value measurement to account for both their financial assets and financial liabilities in their calculation of a NAV per share (or equivalent).
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||
(in millions) |
|
Ref |
|
Fair Value |
|
|
Total |
|
|
Redemption |
|
Redemption |
||
Equity method(1): |
|
|
|
|
|
|
|
|
|
|
|
|
||
Hedge funds/funds of hedge |
|
(a) |
|
$ |
462 |
|
|
$ |
147 |
|
|
Daily/Monthly (17%) |
|
1 – 90 days |
Private equity funds |
|
(b) |
|
|
1,119 |
|
|
|
182 |
|
|
N/R |
|
N/R |
Real assets funds |
|
(c) |
|
|
361 |
|
|
|
258 |
|
|
Quarterly (13%) |
|
60 days |
Deferred cash compensation plan |
|
(e) |
|
|
249 |
|
|
|
— |
|
|
Monthly |
|
1 – 90 days |
Consolidated sponsored |
|
|
|
|
|
|
|
|
|
|
|
|
||
Real assets funds |
|
(c) |
|
|
151 |
|
|
|
71 |
|
|
N/R |
|
N/R |
Private equity funds |
|
(d) |
|
|
210 |
|
|
|
62 |
|
|
N/R |
|
N/R |
Hedge funds/other |
|
(a) |
|
|
114 |
|
|
|
31 |
|
|
Quarterly |
|
90 days |
Total |
|
|
|
$ |
2,666 |
|
|
$ |
751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||
(in millions) |
|
Ref |
|
Fair Value |
|
|
Total |
|
|
Redemption |
|
Redemption |
||
Equity method(1): |
|
|
|
|
|
|
|
|
|
|
|
|
||
Hedge funds/funds of hedge |
|
(a) |
|
$ |
525 |
|
|
$ |
149 |
|
|
Daily/Monthly (23%) |
|
1 – 90 days |
Private equity funds |
|
(b) |
|
|
885 |
|
|
|
174 |
|
|
N/R |
|
N/R |
Real assets funds |
|
(c) |
|
|
304 |
|
|
|
304 |
|
|
Quarterly (17%) |
|
60 days |
Consolidated sponsored |
|
|
|
|
|
|
|
|
|
|
|
|
||
Real assets funds |
|
(c) |
|
|
116 |
|
|
|
94 |
|
|
N/R |
|
N/R |
Private equity funds |
|
(d) |
|
|
183 |
|
|
|
37 |
|
|
N/R |
|
N/R |
Other funds |
|
|
|
|
17 |
|
|
|
31 |
|
|
Quarterly |
|
90 days |
Total |
|
|
|
$ |
2,030 |
|
|
$ |
789 |
|
|
|
|
|
N/R – Not Redeemable
19
Fair Value Option
At June 30, 2023 and December 31, 2022, the Company elected the fair value option for certain investments in CLOs of approximately $41 million and $52 million, respectively, reported within investments.
In addition, the Company elected the fair value option for bank loans and borrowings of a consolidated CLO, recorded within investments and other liabilities, respectively. The following table summarizes the information related to these bank loans and borrowings at June 30, 2023 and December 31, 2022:
|
|
June 30, |
|
|
December 31, |
|
||
(in millions) |
|
2023 |
|
|
2022 |
|
||
CLO Bank loans: |
|
|
|
|
|
|
||
Aggregate principal amounts outstanding |
|
$ |
227 |
|
|
$ |
238 |
|
Fair value |
|
|
218 |
|
|
|
234 |
|
Aggregate unpaid principal balance in excess of (less than) fair value |
|
$ |
9 |
|
|
$ |
4 |
|
|
|
|
|
|
|
|
||
CLO Borrowings: |
|
|
|
|
|
|
||
Aggregate principal amounts outstanding |
|
$ |
224 |
|
|
$ |
245 |
|
Fair value |
|
$ |
217 |
|
|
$ |
245 |
|
At June 30, 2023, the principal amounts outstanding of the borrowings issued by the CLO mature in 2030 and may be repaid prior to maturity at any time.
During the three and six months ended June 30, 2023 and 2022, the net gains (losses) from the change in fair value of the bank loans and borrowings held by the consolidated CLO were not material and were recorded in net gain (loss) on the condensed consolidated statements of income. The change in fair value of the assets and liabilities included interest income and expense, respectively.
8. Derivatives and Hedging
The Company maintains a program to enter into exchange traded futures as a macro hedging strategy to hedge market price and interest rate exposures with respect to its total portfolio of seed investments in sponsored investment products. At June 30, 2023 and December 31, 2022, the Company had outstanding exchange traded futures related to this macro hedging strategy with aggregate notional values of approximately $1.6 billion and $1.5 billion, with expiration dates during the third and first quarter of 2023, respectively.
In addition, beginning in the first quarter of 2023, the Company entered into futures to economically hedge the exposure to market movements on certain deferred cash compensation plans. At June 30, 2023, the Company had outstanding exchange traded futures with aggregate notional values related to its deferred cash compensation hedging program of approximately $186 million, with expiration dates during the third quarter of 2023.
Changes in the value of the futures contracts are recognized as gains or losses within nonoperating income (expense). Variation margin payments, which represent settlements of profit/loss, are generally received or made daily, and are reflected in other assets and other liabilities on the condensed consolidated statements of financial condition. These amounts were not material as of June 30, 2023 and December 31, 2022.
20
The Company executes forward foreign currency exchange contracts to mitigate the risk of certain foreign exchange movements. At June 30, 2023 and December 31, 2022, the Company had outstanding forward foreign currency exchange contracts with aggregate notional values of approximately $2.5 billion and $2.2 billion, with expiration dates in July 2023 and January 2023, respectively.
At both June 30, 2023 and December 31, 2022, the Company had a derivative providing credit protection with a notional amount of approximately $17 million to a counterparty, representing the Company’s maximum risk of loss with respect to the derivative. The Company carries the derivative at fair value based on the expected discounted future cash outflows under the arrangement.
The following table presents the fair values of derivative instruments recognized in the condensed consolidated statements of financial condition at June 30, 2023 and December 31, 2022:
|
Assets |
|
|
Liabilities |
|
||||||||||||||
(in millions) |
Statement of |
|
June 30, 2023 |
|
|
December 31, 2022 |
|
|
Statement of |
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||||
Derivative Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward foreign currency |
Other assets |
|
$ |
2 |
|
|
$ |
1 |
|
|
Other liabilities |
|
$ |
4 |
|
|
$ |
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
The following table presents realized and unrealized gains (losses) recognized in the condensed consolidated statements of income on derivative instruments:
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
Statement of Income |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
(in millions) |
|
Classification |
|
Gains (Losses) |
|
|
Gains (Losses) |
|
||||||||||
Derivative Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exchange traded futures(1) |
|
Nonoperating income (expense) |
|
$ |
(13 |
) |
|
$ |
— |
|
|
$ |
(58 |
) |
|
$ |
— |
|
Forward foreign currency |
|
General and administration expense |
|
|
55 |
|
|
|
(129 |
) |
|
|
95 |
|
|
|
(171 |
) |
Total return swaps |
|
Nonoperating income (expense) |
|
|
— |
|
|
|
62 |
|
|
|
— |
|
|
|
103 |
|
Total gain (loss) from derivative |
|
|
|
$ |
42 |
|
|
$ |
(67 |
) |
|
$ |
37 |
|
|
$ |
(68 |
) |
The Company's CIPs may utilize derivative instruments as a part of the funds' investment strategies. The change in fair value of such derivatives, which is recorded in nonoperating income (expense), was not material for the three and six months ended June 30, 2023 and 2022.
See Note 15, Borrowings, in the 2022 Form 10-K for more information on the Company’s net investment hedge.
9. Goodwill
Goodwill activity during the six months ended June 30, 2023 was as follows:
(in millions) |
|
|
|
December 31, 2022 |
$ |
15,341 |
|
Other(1) |
|
(3 |
) |
June 30, 2023 |
$ |
15,338 |
|
21
10. Intangible Assets
The carrying amounts of identifiable intangible assets are summarized as follows:
(in millions) |
Indefinite-lived |
|
|
Finite-lived |
|
|
Total |
|
|||
December 31, 2022 |
$ |
17,578 |
|
|
$ |
724 |
|
|
$ |
18,302 |
|
Amortization expense |
|
— |
|
|
|
(74 |
) |
|
|
(74 |
) |
June 30, 2023 |
$ |
17,578 |
|
|
$ |
650 |
|
|
$ |
18,228 |
|
11. Leases
The following table presents components of lease cost included in general and administration expense on the condensed consolidated statements of income:
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Lease cost: |
|
|
|
|
|
|
|
|
|
|
|
||||
Operating lease cost(1) |
$ |
46 |
|
|
$ |
54 |
|
|
$ |
101 |
|
|
$ |
105 |
|
Variable lease cost(2) |
|
9 |
|
|
|
11 |
|
|
|
20 |
|
|
|
22 |
|
Total lease cost |
$ |
55 |
|
|
$ |
65 |
|
|
$ |
121 |
|
|
$ |
127 |
|
Supplemental information related to operating leases is summarized below:
|
|
Six Months Ended |
|
|||||
|
|
June 30, |
|
|||||
(in millions) |
|
2023 |
|
|
2022 |
|
||
Supplemental cash flow information: |
|
|
|
|
|
|
||
Operating cash flows from operating leases included in the measurement |
|
$ |
69 |
|
|
$ |
82 |
|
|
|
|
|
|
|
|
||
Supplemental noncash information: |
|
|
|
|
|
|
||
ROU assets in exchange for operating lease liabilities |
|
$ |
15 |
|
|
$ |
37 |
|
|
June 30, |
|
December 31, |
||||||
|
2023 |
|
2022 |
||||||
Lease term and discount rate: |
|
|
|
|
|
|
|
||
Weighted-average remaining lease term |
|
15 |
|
years |
|
|
16 |
|
years |
Weighted-average discount rate |
|
3 |
|
% |
|
|
3 |
|
% |
22
12. Other Assets
At June 30, 2023 and December 31, 2022, the Company had $787 million and $809 million of equity method investments, respectively, recorded within other assets on the condensed consolidated statements of financial condition, since such investees are considered to be an extension of BlackRock’s core business. BlackRock’s share of these investees’ underlying net income or loss is based upon the most currently available information and is recorded within advisory and other revenue. In accordance with GAAP, certain equity method investees do not account for both their financial assets and liabilities under fair value measures; therefore, the Company’s investment in such equity method investees may not represent fair value.
At June 30, 2023 and December 31, 2022, the Company had $479 million and $375 million, respectively, of other nonequity method corporate minority investments recorded within other assets on the condensed consolidated statements of financial condition, since such investees are considered to be an extension of BlackRock’s core business. These investments included equity securities, generally measured at fair value or under the measurement alternative to fair value for nonmarketable securities, and a strategic private debt investment measured at fair value. Changes in value of the equity securities are recorded in nonoperating income (expense) and changes in value of the debt security is recorded in AOCI, net of tax. See Note 2, Significant Accounting Policies, in the notes to the consolidated financial statements contained in the 2022 Form 10-K for further information.
13. Borrowings
Short-Term Borrowings
2023 Revolving Credit Facility. The Company maintains an unsecured revolving credit facility which is available for working capital and general corporate purposes (the “2023 credit facility”). In March 2023, the 2023 credit facility was amended to, among other things, (1) increase the aggregate commitment amount by $300 million to $5 billion, (2) extend the maturity date to March 2028 and (3) change the secured overnight financing rate (“SOFR”) adjustment to 10 bps per annum for all SOFR-based borrowings. The 2023 credit facility permits the Company to request up to an additional $1.0 billion of borrowing capacity, subject to lender credit approval, which could increase the overall size of the 2023 credit facility to an aggregate principal amount of up to $6 billion. The 2023 credit facility requires the Company not to exceed a maximum leverage ratio (ratio of net debt to earnings before interest, taxes, depreciation and amortization, where net debt equals total debt less unrestricted cash) of 3 to 1, which was satisfied with a ratio of less than 1 to 1 at June 30, 2023. At June 30, 2023, the Company had no amount outstanding under the 2023 credit facility.
Commercial Paper Program. The Company can issue unsecured commercial paper notes (the “CP Notes”) on a private-placement basis up to a maximum aggregate amount outstanding at any time of $4 billion. The commercial paper program is currently supported by the 2023 credit facility. At June 30, 2023, BlackRock had no CP Notes outstanding.
Long-Term Borrowings
2033 Notes. In May 2023, the Company issued $1.25 billion in aggregate principal amount of 4.75% senior unsecured notes maturing on May 25, 2033 (the “2033 Notes”). The net proceeds of the 2033 Notes are being used for general corporate purposes, which may include the future repayment of all or a portion of the $1.0 billion 3.50% Notes due March 2024. Interest of approximately $59 million per year is payable semi-annually on May 25 and November 25 of each year, commencing on November 25, 2023. The 2033 Notes may be redeemed at the option of the Company, in whole or in part, at any time prior to February 25, 2033 at a "make-whole" redemption price, or thereafter at 100% of the principal amount of the 2033 Notes, in each case plus accrued but unpaid interest. The unamortized discount and debt issuance costs are being amortized over the remaining term of the 2033 Notes.
23
The carrying value and fair value of long-term borrowings determined using market prices and EUR/USD foreign exchange rate at the end of June 2023 included the following:
(in millions) |
Maturity |
|
|
Unamortized |
|
|
Carrying Value |
|
|
Fair Value |
|
||||
3.50% Notes due 2024 |
$ |
1,000 |
|
|
$ |
— |
|
|
$ |
1,000 |
|
|
$ |
983 |
|
1.25% Notes due 2025 |
|
764 |
|
|
|
(1 |
) |
|
|
763 |
|
|
|
726 |
|
3.20% Notes due 2027 |
|
700 |
|
|
|
(3 |
) |
|
|
697 |
|
|
|
663 |
|
3.25% Notes due 2029 |
|
1,000 |
|
|
|
(9 |
) |
|
|
991 |
|
|
|
926 |
|
2.40% Notes due 2030 |
|
1,000 |
|
|
|
(5 |
) |
|
|
995 |
|
|
|
863 |
|
1.90% Notes due 2031 |
|
1,250 |
|
|
|
(9 |
) |
|
|
1,241 |
|
|
|
1,022 |
|
2.10% Notes due 2032 |
|
1,000 |
|
|
|
(13 |
) |
|
|
987 |
|
|
|
804 |
|
4.75% Notes due 2033 |
|
1,250 |
|
|
|
(20 |
) |
|
|
1,230 |
|
|
|
1,224 |
|
Total long-term borrowings |
$ |
7,964 |
|
|
$ |
(60 |
) |
|
$ |
7,904 |
|
|
$ |
7,211 |
|
Long-term borrowings at December 31, 2022 had a carrying value of $6.7 billion and a fair value of $5.9 billion, determined using market prices at the end of December 2022.
See Note 15, Borrowings, in the 2022 Form 10-K for more information regarding the Company’s borrowings.
14. Commitments and Contingencies
Investment Commitments. At June 30, 2023, the Company had $797 million of various capital commitments to fund sponsored investment products, including CIPs. These products include private equity funds, real assets funds and opportunistic funds. This amount excludes additional commitments made by consolidated funds of funds to underlying third-party funds as third-party noncontrolling interest holders have the legal obligation to fund the respective commitments of such funds of funds. Generally, the timing of the funding of these commitments is unknown and the commitments are callable on demand at any time prior to the expiration of the commitment. These unfunded commitments are not recorded on the condensed consolidated statements of financial condition. These commitments do not include potential future commitments approved by the Company that are not yet legally binding. The Company intends to make additional capital commitments from time to time to fund additional investment products for, and with, its clients.
Contingencies
Legal Proceedings. From time to time, BlackRock receives subpoenas or other requests for information from various US federal and state governmental and regulatory authorities and international governmental and regulatory authorities in connection with industry-wide or other investigations or proceedings. It is BlackRock’s policy to cooperate fully with such matters. BlackRock is currently responding to requests from the SEC in connection with a publicly reported, industry-wide investigation of investment advisers’ compliance with record retention requirements relating to certain types of electronic communications. BlackRock is cooperating with the SEC’s investigation.
The Company, certain of its subsidiaries and employees have been named as defendants in various legal actions, including arbitrations and other litigation arising in connection with BlackRock’s activities. Additionally, BlackRock-advised investment portfolios may be subject to lawsuits, any of which potentially could harm the investment returns of the applicable portfolio or result in the Company being liable to the portfolios for any resulting damages.
Management, after consultation with legal counsel, currently does not anticipate that the aggregate liability arising out of regulatory matters or lawsuits will have a material effect on BlackRock’s results of operations, financial position, or cash flows. However, there is no assurance as to whether any such pending or threatened matters will have a material effect on BlackRock’s results of operations, financial position or cash flows in any future reporting period. Due to uncertainties surrounding the outcome of these matters, management cannot reasonably estimate the possible loss or range of loss that may arise from these matters.
24
Indemnifications. In the ordinary course of business or in connection with certain acquisition agreements, BlackRock enters into contracts pursuant to which it may agree to indemnify third parties in certain circumstances. The terms of these indemnities vary from contract to contract and the amount of indemnification liability, if any, cannot be determined or the likelihood of any liability is considered remote. Consequently, no liability has been recorded on the condensed consolidated statements of financial condition.
In connection with securities lending transactions, BlackRock has agreed to indemnify certain securities lending clients against potential loss resulting from a borrower’s failure to fulfill its obligations under the securities lending agreement should the value of the collateral pledged by the borrower at the time of default be insufficient to cover the borrower’s obligation under the securities lending agreement. The amount of securities on loan as of June 30, 2023 and subject to this type of indemnification was approximately $247 billion. In the Company’s capacity as lending agent, cash and securities totaling approximately $265 billion were held as collateral for indemnified securities on loan at June 30, 2023. The fair value of these indemnifications was not material at June 30, 2023.
25
15. Revenue
The table below presents detail of revenue for the three and six months ended June 30, 2023 and 2022 and includes the product mix of investment advisory, administration fees and securities lending revenue, and performance fees.
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Investment advisory, administration fees and |
|
|
|
|
|
|
|
|
|
|
|
||||
Equity: |
|
|
|
|
|
|
|
|
|
|
|
||||
Active |
$ |
506 |
|
|
$ |
550 |
|
|
$ |
1,006 |
|
|
$ |
1,166 |
|
ETFs |
|
1,102 |
|
|
|
1,103 |
|
|
|
2,180 |
|
|
|
2,261 |
|
Non-ETF index |
|
197 |
|
|
|
186 |
|
|
|
374 |
|
|
|
373 |
|
Equity subtotal |
|
1,805 |
|
|
|
1,839 |
|
|
|
3,560 |
|
|
|
3,800 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
||||
Active |
|
482 |
|
|
|
503 |
|
|
|
950 |
|
|
|
1,037 |
|
ETFs |
|
309 |
|
|
|
274 |
|
|
|
604 |
|
|
|
563 |
|
Non-ETF index |
|
88 |
|
|
|
102 |
|
|
|
175 |
|
|
|
220 |
|
Fixed income subtotal |
|
879 |
|
|
|
879 |
|
|
|
1,729 |
|
|
|
1,820 |
|
Multi-asset |
|
300 |
|
|
|
331 |
|
|
|
596 |
|
|
|
690 |
|
Alternatives: |
|
|
|
|
|
|
|
|
|
|
|
||||
Illiquid alternatives |
|
206 |
|
|
|
184 |
|
|
|
407 |
|
|
|
363 |
|
Liquid alternatives |
|
146 |
|
|
|
161 |
|
|
|
291 |
|
|
|
328 |
|
Currency and commodities(1) |
|
49 |
|
|
|
62 |
|
|
|
95 |
|
|
|
118 |
|
Alternatives subtotal |
|
401 |
|
|
|
407 |
|
|
|
793 |
|
|
|
809 |
|
Long-term |
|
3,385 |
|
|
|
3,456 |
|
|
|
6,678 |
|
|
|
7,119 |
|
Cash management |
|
226 |
|
|
|
232 |
|
|
|
435 |
|
|
|
402 |
|
Total investment advisory, administration fees |
|
3,611 |
|
|
|
3,688 |
|
|
|
7,113 |
|
|
|
7,521 |
|
Investment advisory performance fees: |
|
|
|
|
|
|
|
|
|
|
|
||||
Equity |
|
15 |
|
|
|
3 |
|
|
|
21 |
|
|
|
15 |
|
Fixed income |
|
— |
|
|
|
13 |
|
|
|
1 |
|
|
|
22 |
|
Multi-asset |
|
3 |
|
|
|
7 |
|
|
|
18 |
|
|
|
12 |
|
Alternatives: |
|
|
|
|
|
|
|
|
|
|
|
||||
Illiquid alternatives |
|
79 |
|
|
|
65 |
|
|
|
100 |
|
|
|
102 |
|
Liquid alternatives |
|
21 |
|
|
|
18 |
|
|
|
33 |
|
|
|
53 |
|
Alternatives subtotal |
|
100 |
|
|
|
83 |
|
|
|
133 |
|
|
|
155 |
|
Total investment advisory performance fees |
|
118 |
|
|
|
106 |
|
|
|
173 |
|
|
|
204 |
|
Technology services revenue |
|
359 |
|
|
|
332 |
|
|
|
699 |
|
|
|
673 |
|
Distribution fees |
|
319 |
|
|
|
361 |
|
|
|
638 |
|
|
|
742 |
|
Advisory and other revenue: |
|
|
|
|
|
|
|
|
|
|
|
||||
Advisory |
|
31 |
|
|
|
15 |
|
|
|
45 |
|
|
|
31 |
|
Other |
|
25 |
|
|
|
24 |
|
|
|
38 |
|
|
|
54 |
|
Total advisory and other revenue |
|
56 |
|
|
|
39 |
|
|
|
83 |
|
|
|
85 |
|
Total revenue |
$ |
4,463 |
|
|
$ |
4,526 |
|
|
$ |
8,706 |
|
|
$ |
9,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
26
The tables below present the investment advisory, administration fees and securities lending revenue by client type and investment style:
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
By client type: |
|
|
|
|
|
|
|
|
|
|
|
||||
Retail |
$ |
1,044 |
|
|
$ |
1,139 |
|
|
$ |
2,076 |
|
|
$ |
2,363 |
|
ETFs |
|
1,460 |
|
|
|
1,436 |
|
|
|
2,878 |
|
|
|
2,937 |
|
Institutional: |
|
|
|
|
|
|
|
|
|
|
|
||||
Active |
|
640 |
|
|
|
636 |
|
|
|
1,262 |
|
|
|
1,311 |
|
Index |
|
241 |
|
|
|
245 |
|
|
|
462 |
|
|
|
508 |
|
Total institutional |
|
881 |
|
|
|
881 |
|
|
|
1,724 |
|
|
|
1,819 |
|
Long-term |
|
3,385 |
|
|
|
3,456 |
|
|
|
6,678 |
|
|
|
7,119 |
|
Cash management |
|
226 |
|
|
|
232 |
|
|
|
435 |
|
|
|
402 |
|
Total |
$ |
3,611 |
|
|
$ |
3,688 |
|
|
$ |
7,113 |
|
|
$ |
7,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
By investment style: |
|
|
|
|
|
|
|
|
|
|
|
||||
Active |
$ |
1,635 |
|
|
$ |
1,727 |
|
|
$ |
3,241 |
|
|
$ |
3,578 |
|
Index and ETFs |
|
1,750 |
|
|
|
1,729 |
|
|
|
3,437 |
|
|
|
3,541 |
|
Long-term |
|
3,385 |
|
|
|
3,456 |
|
|
|
6,678 |
|
|
|
7,119 |
|
Cash management |
|
226 |
|
|
|
232 |
|
|
|
435 |
|
|
|
402 |
|
Total |
$ |
3,611 |
|
|
$ |
3,688 |
|
|
$ |
7,113 |
|
|
$ |
7,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
27
Investment Advisory and Administration Fees – Remaining Performance Obligation
The tables below present estimated investment advisory and administration fees expected to be recognized in the future related to the unsatisfied portion of the performance obligations at June 30, 2023 and 2022:
June 30, 2023
|
Remainder of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
(in millions) |
2023 |
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
Thereafter |
|
|
Total |
|
||||||
Investment advisory and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Alternatives(1)(2) |
$ |
87 |
|
|
$ |
131 |
|
|
$ |
100 |
|
|
$ |
84 |
|
|
$ |
62 |
|
|
$ |
464 |
|
June 30, 2022
|
Remainder of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
(in millions) |
2022 |
|
|
2023 |
|
|
2024 |
|
|
2025 |
|
|
Thereafter |
|
|
Total |
|
||||||
Investment advisory and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Alternatives(1)(2) |
$ |
91 |
|
|
$ |
169 |
|
|
$ |
106 |
|
|
$ |
68 |
|
|
$ |
49 |
|
|
$ |
483 |
|
Change in Deferred Carried Interest Liability
The table below presents changes in the deferred carried interest liability, which is included in other liabilities on the condensed consolidated statements of financial condition, for the three and six months ended June 30, 2023 and 2022:
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Beginning balance |
$ |
1,458 |
|
|
$ |
1,699 |
|
|
$ |
1,420 |
|
|
$ |
1,508 |
|
Net increase (decrease) in unrealized allocations |
|
265 |
|
|
|
(46 |
) |
|
|
319 |
|
|
|
177 |
|
Performance fee revenue recognized |
|
(72 |
) |
|
|
(61 |
) |
|
|
(88 |
) |
|
|
(93 |
) |
Ending balance |
$ |
1,651 |
|
|
$ |
1,592 |
|
|
$ |
1,651 |
|
|
$ |
1,592 |
|
28
Technology Services Revenue – Remaining Performance Obligation
The tables below present estimated technology services revenue expected to be recognized in the future related to the unsatisfied portion of the performance obligations at June 30, 2023 and 2022:
June 30, 2023
|
Remainder of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
(in millions) |
2023 |
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
Thereafter |
|
|
Total |
|
||||||
Technology services revenue(1)(2) |
$ |
69 |
|
|
$ |
73 |
|
|
$ |
46 |
|
|
$ |
33 |
|
|
$ |
25 |
|
|
$ |
246 |
|
June 30, 2022
|
Remainder of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
(in millions) |
2022 |
|
|
2023 |
|
|
2024 |
|
|
2025 |
|
|
Thereafter |
|
|
Total |
|
||||||
Technology services revenue(1)(2) |
$ |
65 |
|
|
$ |
70 |
|
|
$ |
42 |
|
|
$ |
27 |
|
|
$ |
23 |
|
|
$ |
227 |
|
In addition to amounts disclosed in the tables above, certain technology services contracts require fixed minimum fees, which are billed on a monthly or quarterly basis in arrears. The Company recognizes such revenue as services are performed. As of June 30, 2023, the estimated fixed minimum fees for the remainder of the year approximated $490 million. The term for these contracts, which are either in their initial or renewal period, ranges from one to five years.
The table below presents changes in the technology services deferred revenue liability for the three and six months ended June 30, 2023 and 2022, which is included in other liabilities on the condensed consolidated statements of financial condition:
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Beginning balance |
$ |
120 |
|
|
$ |
113 |
|
|
$ |
125 |
|
|
$ |
122 |
|
Additions(1) |
|
27 |
|
|
|
27 |
|
|
|
48 |
|
|
|
49 |
|
Revenue recognized that was included |
|
(25 |
) |
|
|
(32 |
) |
|
|
(51 |
) |
|
|
(63 |
) |
Ending balance |
$ |
122 |
|
|
$ |
108 |
|
|
$ |
122 |
|
|
$ |
108 |
|
29
16. Stock-Based Compensation
Restricted Stock Units ("RSUs")
RSU activity for the six months ended June 30, 2023 is summarized below.
Outstanding at |
RSUs |
|
|
Weighted- |
|
||
December 31, 2022 |
|
2,009,207 |
|
|
$ |
710.67 |
|
Granted |
|
705,866 |
|
|
$ |
734.63 |
|
Converted |
|
(829,369 |
) |
|
$ |
635.84 |
|
Forfeited |
|
(32,402 |
) |
|
$ |
759.65 |
|
June 30, 2023 |
|
1,853,302 |
|
|
$ |
752.43 |
|
In January 2023, pursuant to the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan (the “Award Plan”), the Company granted as part of the 2022 annual incentive compensation 342,706 RSUs to employees that vest ratably over three years from the grant date and 259,465 RSUs to employees that cliff vest 100% on January 31, 2026. On May 30, 2023, pursuant to the Award Plan, the Company granted 71,267 RSUs that cliff vest 100% on May 30, 2027. The Company values RSUs at their grant-date fair value as measured by BlackRock’s common stock price. The total fair market value of RSUs granted to employees during the six months ended June 30, 2023 was $519 million.
At June 30, 2023, the intrinsic value of outstanding RSUs was $1.3 billion, reflecting a closing stock price of $691.14.
At June 30, 2023, total unrecognized stock-based compensation expense related to unvested RSUs was $666 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted-average period of 1.5 years.
Performance-Based RSUs.
Performance-based RSU activity for the six months ended June 30, 2023 is summarized below.
Outstanding at |
Performance- |
|
|
Weighted- |
|
||
December 31, 2022 |
|
531,054 |
|
|
$ |
672.47 |
|
Granted |
|
169,938 |
|
|
$ |
743.60 |
|
Additional shares granted due to attainment of performance measures |
|
29,194 |
|
|
$ |
532.15 |
|
Converted |
|
(262,797 |
) |
|
$ |
534.00 |
|
Forfeited |
|
(11,005 |
) |
|
$ |
756.51 |
|
June 30, 2023 |
|
456,384 |
|
|
$ |
767.69 |
|
In January 2023, pursuant to the Award Plan, the Company granted 169,938 performance-based RSUs that cliff vest 100% on January 31, 2026. These awards are amortized over a service period of three years. The number of shares distributed at vesting could be higher or lower than the original grant based on the level of attainment of predetermined Company performance measures. In January 2023, the Company granted 29,194 additional RSUs based on the attainment of Company performance measures during the performance period.
The Company values performance-based RSUs at their grant-date fair value as measured by BlackRock’s common stock price. The total grant-date fair market value of performance-based RSUs granted to employees during the six months ended June 30, 2023 was $142 million.
At June 30, 2023, the intrinsic value of outstanding performance-based RSUs was $315 million, reflecting a closing stock price of $691.14.
At June 30, 2023, total unrecognized stock-based compensation expense related to unvested performance-based awards was $136 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted-average period of 1.6 years.
See Note 18, Stock-Based Compensation, in the 2022 Form 10-K for more information on performance-based RSUs.
30
Stock Options
Stock option activity and ending balance for the six months ended June 30, 2023 is summarized below.
|
2017 Performance-based |
|
|
2023 Performance-based |
|
|
2023 Time-based |
|
|||||||||||||||
|
Shares |
|
|
Weighted |
|
|
Shares |
|
|
Weighted |
|
|
Shares |
|
|
Weighted |
|
||||||
Outstanding at December 31, 2022 |
|
1,735,898 |
|
|
$ |
513.50 |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
Granted |
|
— |
|
|
$ |
— |
|
|
|
814,482 |
|
|
$ |
673.58 |
|
|
|
326,391 |
|
|
$ |
673.58 |
|
Exercised |
|
(54,072 |
) |
|
$ |
513.50 |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
Forfeited |
|
(2,577 |
) |
|
$ |
513.50 |
|
|
|
(6,787 |
) |
|
$ |
673.58 |
|
|
|
— |
|
|
$ |
— |
|
Outstanding at June 30, 2023 |
|
1,679,249 |
|
|
$ |
513.50 |
|
|
|
807,695 |
|
|
$ |
673.58 |
|
|
|
326,391 |
|
|
$ |
673.58 |
|
|
|
Options Outstanding |
|
|
Options Exercisable |
|
||||||||||||||||||||||||||
Option Type |
|
Exercise Prices |
|
|
Options Outstanding(1) |
|
|
Weighted Average Remaining Life (years) |
|
|
Aggregate |
|
|
Exercise Prices |
|
|
Options |
|
|
Weighted Average Remaining Life (years) |
|
|
Aggregate |
|
||||||||
2017 Performance-based |
|
$ |
513.50 |
|
|
|
1,679,249 |
|
|
|
3.4 |
|
|
$ |
298 |
|
|
$ |
513.50 |
|
|
|
540,583 |
|
|
|
3.4 |
|
|
$ |
96 |
|
2023 Performance-based |
|
$ |
673.58 |
|
|
|
807,695 |
|
|
|
8.9 |
|
|
|
14 |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
2023 Time-based |
|
$ |
673.58 |
|
|
|
326,391 |
|
|
|
8.9 |
|
|
|
6 |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
2,813,335 |
|
|
|
5.7 |
|
|
$ |
318 |
|
|
|
|
|
|
540,583 |
|
|
|
3.4 |
|
|
$ |
96 |
|
||
At June 30, 2023, total unrecognized stock-based compensation expense related to unvested performance-based stock options and time-based stock options was $184 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted-average period of 3 years.
Performance-based stock options
In 2017, pursuant to the Award Plan, the Company awarded performance-based stock option grants to certain employees ("2017 Performance-based Options"). Vesting of 2017 Performance-based Options was contingent upon the achievement of obtaining 125% of BlackRock's grant-date stock price within five years from the grant date and the attainment of Company performance measures during the four-year performance period. Both hurdles have been achieved, and the first tranche of the awards vested at the end of 2022 with two subsequent equal installments vesting at the end of 2023 and 2024, respectively. The aggregate intrinsic value of 2017 Performance-based Options exercised during the six months ended June 30, 2023 was $12 million. See Note 18, Stock-Based Compensation, in the 2022 Form 10-K for more information on 2017 Performance-based Options.
On May 30, 2023, pursuant to the Award Plan, the Company awarded performance-based options to purchase 814,482 shares of BlackRock common stock to certain employees as long-term incentive compensation ("2023 Performance-based Options"). Vesting of 2023 Performance-based Options is contingent upon the achievement of obtaining 130% of grant-date stock price over 60 calendar days within four years from the grant date and attainment of Company performance measures during the three-year performance period. If both hurdles are achieved, the award will vest in three tranches of 25%, 25% and 50% in May of 2027, 2028 and 2029, respectively. Vested options are exercisable for up to nine years following the grant date, and the awards are forfeited if the employee resigns before the respective vesting date. The expense for each tranche is amortized over the respective requisite service period.
The 2023 Performance-based Options have a strike price of $673.58 which was the closing price of the shares on the grant date. The grant-date fair value of the 2023 Performance-based Options was $120 million and was estimated using a Monte Carlo simulation with an embedded lattice model using the assumptions included in the following table:
Grant Year |
Expected Term (Years)(1) |
|
Expected Stock Volatility(2) |
|
|
Expected Dividend Yield(3) |
|
|
Risk-Free Interest Rate(4) |
|
|||
2023 |
6.02 |
|
|
27.73 |
% |
|
|
3.02 |
% |
|
|
3.61 |
% |
31
Time-based stock options
On May 30, 2023, pursuant to the Award Plan, the Company awarded time-based stock options to purchase 326,391 shares of BlackRock common stock to certain employees as long-term incentive compensation ("2023 Time-based Options"). These awards will vest in three tranches of 25%, 25% and 50% in May 2027, 2028 and 2029, respectively. Vested options can be exercised up to nine years following the grant date, and the awards are forfeited if the employee resigns before the respective vesting date.
The 2023 Time-based Options have a strike price of $673.58 which was the closing price of the shares on the grant date. The grant-date fair value of the 2023 Time-based Options was $55 million and was estimated using a Black-Scholes-Merton model using the assumptions included in the following table:
Grant Year |
Expected Term (Years)(1) |
|
|
Expected Stock Volatility(2) |
|
|
Expected Dividend Yield(3) |
|
|
Risk-Free Interest Rate(4) |
|
||||
2023 |
|
7.13 |
|
|
|
28.29 |
% |
|
|
3.02 |
% |
|
|
3.65 |
% |
17. Net Capital Requirements
The Company is required to maintain net capital in certain regulated subsidiaries within a number of jurisdictions, which is partially maintained by retaining cash and cash equivalent investments in those subsidiaries or jurisdictions. As a result, such subsidiaries of the Company may be restricted in their ability to transfer cash between different jurisdictions and to their parents. Additionally, transfers of cash between international jurisdictions may have adverse tax consequences that could discourage such transfers.
At June 30, 2023, the Company was required to maintain approximately $2.3 billion in net capital in certain regulated subsidiaries, including BlackRock Institutional Trust Company, N.A. (a wholly owned subsidiary of the Company chartered as a national bank with powers limited to trust and other fiduciary activities and subject to regulatory capital requirements administered by the US Office of the Comptroller of the Currency), entities regulated by the Financial Conduct Authority and Prudential Regulation Authority in the UK, and the Company’s broker-dealers. The Company was in compliance with all applicable regulatory net capital requirements.
32
18. Accumulated Other Comprehensive Income (Loss)
The following table presents changes in AOCI for the three and six months ended June 30, 2023 and 2022:
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Beginning balance |
$ |
(975 |
) |
|
$ |
(675 |
) |
|
$ |
(1,101 |
) |
|
$ |
(550 |
) |
Foreign currency translation adjustments(1) |
|
95 |
|
|
|
(416 |
) |
|
|
221 |
|
|
|
(541 |
) |
Ending balance |
$ |
(880 |
) |
|
$ |
(1,091 |
) |
|
$ |
(880 |
) |
|
$ |
(1,091 |
) |
19. Capital Stock
Share Repurchases. In January 2023, the Company announced that the Board of Directors authorized the repurchase of an additional seven million shares under the Company's existing share repurchase program for a total of up to approximately 7.9 million shares of BlackRock common stock.
During the six months ended June 30, 2023, the Company repurchased 1.1 million common shares under the Company’s existing share repurchase program for approximately $750 million. At June 30, 2023, there were approximately 6.8 million shares still authorized to be repurchased under the program.
20. Restructuring Charge
A restructuring charge of $91 million ($69 million after-tax), comprised of $58 million of severance and $33 million of expense related to the accelerated amortization of previously granted stock-based compensation awards, was recorded in the fourth quarter of 2022 in connection with an initiative to modify the workforce to align more closely with strategic priorities.
The table below presents a rollforward of the Company's restructuring liability for the six months ended June 30, 2023, which is included in other liabilities on the condensed consolidated statements of financial condition.
|
Six Months Ended |
|
|
(in millions) |
June 30, 2023 |
|
|
Liability as of December 31, 2022 |
$ |
58 |
|
Cash payments |
|
(53 |
) |
Liability as of June 30, 2023 |
$ |
5 |
|
21. Income Taxes
Income tax expense for the six months ended June 30, 2023 included $40 million of discrete tax benefits primarily related to stock-based compensation awards that vested in the first quarter of 2023, offset by a $38 million discrete tax expense related to the resolution of certain outstanding tax matters.
Income tax expense for the six months ended June 30, 2022 included $133 million of discrete tax benefits related to stock-based compensation awards and the resolution of certain outstanding tax matters. In addition, income tax expense for the six months ended June 30, 2022 included $18 million of net noncash tax benefits related to the revaluation of certain deferred income tax liabilities.
33
22. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share (“EPS”) for the three and six months ended June 30, 2023 and 2022 under the treasury stock method:
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions, except shares and per share data) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net income attributable to BlackRock, Inc. |
$ |
1,366 |
|
|
$ |
1,077 |
|
|
$ |
2,523 |
|
|
$ |
2,513 |
|
Basic weighted-average shares outstanding |
|
149,604,642 |
|
|
|
151,292,580 |
|
|
|
149,756,151 |
|
|
|
151,511,496 |
|
Dilutive effect of: |
|
|
|
|
|
|
|
|
|
|
|
||||
Nonparticipating RSUs |
|
764,079 |
|
|
|
835,374 |
|
|
|
885,861 |
|
|
|
1,032,540 |
|
Stock options |
|
370,492 |
|
|
|
324,366 |
|
|
|
401,751 |
|
|
|
446,111 |
|
Total diluted weighted-average shares |
|
150,739,213 |
|
|
|
152,452,320 |
|
|
|
151,043,763 |
|
|
|
152,990,147 |
|
Basic earnings per share |
$ |
9.13 |
|
|
$ |
7.12 |
|
|
$ |
16.85 |
|
|
$ |
16.59 |
|
Diluted earnings per share |
$ |
9.06 |
|
|
$ |
7.06 |
|
|
$ |
16.70 |
|
|
$ |
16.43 |
|
For the three and six months ended June 30, 2023, 116,559 and 60,850 shares, primarily related to stock options, respectively, were excluded from the calculation of diluted EPS because to include them would have an anti-dilutive effect. For the three and six months ended June 30, 2022, 560,841 and 492,045 RSUs, respectively, were excluded from the calculation of diluted EPS because to include them would have an anti-dilutive effect. Certain performance-based RSUs and stock options were excluded from the diluted EPS calculation because the designated contingencies were not met for the three and six months ended June 30, 2023 and 2022, respectively.
23. Segment Information
The Company’s management directs BlackRock’s operations as one business, the asset management business. The Company utilizes a consolidated approach to assess performance and allocate resources. As such, the Company operates in one business segment.
The following table illustrates total revenue for the three and six months ended June 30, 2023 and 2022 by geographic region. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the customer resides or affiliated services are provided.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Americas |
|
$ |
2,982 |
|
|
$ |
3,014 |
|
|
$ |
5,813 |
|
|
$ |
6,103 |
|
Europe |
|
|
1,291 |
|
|
|
1,307 |
|
|
|
2,515 |
|
|
|
2,703 |
|
Asia-Pacific |
|
|
190 |
|
|
|
205 |
|
|
|
378 |
|
|
|
419 |
|
Total revenue |
|
$ |
4,463 |
|
|
$ |
4,526 |
|
|
$ |
8,706 |
|
|
$ |
9,225 |
|
See Note 15, Revenue, for further information on the Company’s sources of revenue.
The following table illustrates long-lived assets that consist of goodwill and property and equipment at June 30, 2023 and December 31, 2022 by geographic region. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the asset is physically located.
|
|
June 30, |
|
|
December 31, |
|
||
(in millions) |
|
2023 |
|
|
2022 |
|
||
Long-lived Assets |
|
|
|
|
|
|
||
Americas |
|
$ |
14,956 |
|
|
$ |
14,945 |
|
Europe |
|
|
1,334 |
|
|
|
1,329 |
|
Asia-Pacific |
|
|
93 |
|
|
|
98 |
|
Total long-lived assets |
|
$ |
16,383 |
|
|
$ |
16,372 |
|
Americas is primarily comprised of the US, Latin America and Canada, while Europe is primarily comprised of the UK, the Netherlands, Switzerland, France, Ireland and Luxembourg. Asia-Pacific is primarily comprised of Hong Kong, Australia, Japan and Singapore.
34
24. Subsequent Events
In July 2023, BlackRock and Jio Financial Services Limited (“JFS”) announced an agreement to form Jio BlackRock, a 50:50 joint venture aimed to deliver tech-enabled access to investment solutions for investors in India. JFS and BlackRock are targeting initial investment of $150 million each in the joint venture, which will launch operations post receipt of regulatory and statutory approvals.
In August 2023, BlackRock completed the acquisition of Kreos Capital, a leading provider of growth and venture debt financing to companies in the technology and healthcare industries. The Company believes this acquisition will add to the Company's position as a leading global credit asset manager and advance its ambitions to provide clients with a diverse range of private market investment products and solutions. The financial impact of the transaction is not expected to be material to the condensed consolidated financial statements.
The Company conducted a review for additional subsequent events and determined that no subsequent events had occurred that would require accrual or additional disclosures.
35
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This report, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions.
BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
BlackRock has previously disclosed risk factors in its Securities and Exchange Commission reports. These risk factors and those identified elsewhere in this report, among others, could cause actual results to differ materially from forward-looking statements or historical performance and include: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management (“AUM”); (3) the relative and absolute investment performance of BlackRock’s investment products; (4) BlackRock’s ability to develop new products and services that address client preferences; (5) the impact of increased competition; (6) the impact of future acquisitions or divestitures; (7) BlackRock’s ability to integrate acquired businesses successfully; (8) the unfavorable resolution of legal proceedings; (9) the extent and timing of any share repurchases; (10) the impact, extent and timing of technological changes and the adequacy of intellectual property, data, information and cybersecurity protection; (11) attempts to circumvent BlackRock’s operational control environment or the potential for human error in connection with BlackRock’s operational systems; (12) the impact of legislative and regulatory actions and reforms, regulatory, supervisory or enforcement actions of government agencies and governmental scrutiny relating to BlackRock; (13) changes in law and policy and uncertainty pending any such changes; (14) any failure to effectively manage conflicts of interest; (15) damage to BlackRock’s reputation; (16) geopolitical unrest, terrorist activities, civil or international hostilities, including the war between Russia and Ukraine, and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (17) a pandemic or health crisis, and related impact on BlackRock’s business, operations and financial condition; (18) climate-related risks to BlackRock's business, products, operations and clients; (19) the ability to attract, train and retain highly qualified and diverse professionals; (20) fluctuations in the carrying value of BlackRock’s economic investments; (21) the impact of changes to tax legislation, including income, payroll and transaction taxes, and taxation on products or transactions, which could affect the value proposition to clients and, generally, the tax position of the Company; (22) BlackRock’s success in negotiating distribution arrangements and maintaining distribution channels for its products; (23) the failure by key third-party providers of BlackRock to fulfill their obligations to the Company; (24) operational, technological and regulatory risks associated with BlackRock’s major technology partnerships; (25) any disruption to the operations of third parties whose functions are integral to BlackRock’s exchange-traded funds (“ETFs”) platform; (26) the impact of BlackRock electing to provide support to its products from time to time and any potential liabilities related to securities lending or other indemnification obligations; and (27) the impact of problems, instability or failure of other financial institutions or the failure or negative performance of products offered by other financial institutions.
36
OVERVIEW
BlackRock, Inc. (together, with its subsidiaries, unless the context otherwise indicates, “BlackRock” or the “Company”) is a leading publicly traded investment management firm with $9.4 trillion of AUM at June 30, 2023. With approximately 19,300 employees in more than 30 countries, BlackRock provides a broad range of investment management and technology services to institutional and retail clients in more than 100 countries across the globe.
BlackRock’s diverse platform of alpha-seeking active, index and cash management investment strategies across asset classes enables the Company to offer choice and tailor investment and asset allocation solutions for clients. Product offerings include single- and multi-asset portfolios investing in equities, fixed income, alternatives and money market instruments. Products are offered directly and through intermediaries in a variety of vehicles, including open-end and closed-end mutual funds, iShares® and BlackRock ETFs, separate accounts, collective trust funds and other pooled investment vehicles. BlackRock also offers technology services, including the investment and risk management technology platform, Aladdin®, Aladdin Wealth, eFront, and Cachematrix, as well as advisory services and solutions to a broad base of institutional and wealth management clients. The Company is highly regulated and manages its clients’ assets as a fiduciary. The Company does not engage in proprietary trading activities that could conflict with the interests of its clients.
BlackRock serves a diverse mix of institutional and retail clients across the globe. Clients include tax-exempt institutions, such as defined benefit and defined contribution pension plans, charities, foundations and endowments; official institutions, such as central banks, sovereign wealth funds, supranationals and other government entities; taxable institutions, including insurance companies, financial institutions, corporations and third-party fund sponsors, and retail intermediaries.
BlackRock maintains a significant global sales and marketing presence that is focused on establishing and maintaining retail and institutional investment management and technology service relationships by marketing its services to investors directly and through third-party distribution relationships, including financial professionals and pension consultants.
37
EXECUTIVE SUMMARY
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions, except per share data) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
GAAP basis(1): |
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
$ |
4,463 |
|
|
$ |
4,526 |
|
|
$ |
8,706 |
|
|
$ |
9,225 |
|
Total expense |
|
2,848 |
|
|
|
2,858 |
|
|
|
5,653 |
|
|
|
5,793 |
|
Operating income |
$ |
1,615 |
|
|
$ |
1,668 |
|
|
$ |
3,053 |
|
|
$ |
3,432 |
|
Operating margin |
|
36.2 |
% |
|
|
36.9 |
% |
|
|
35.1 |
% |
|
|
37.2 |
% |
Nonoperating income (expense), less net income |
|
194 |
|
|
|
(233 |
) |
|
|
298 |
|
|
|
(298 |
) |
Income tax expense |
|
443 |
|
|
|
358 |
|
|
|
828 |
|
|
|
621 |
|
Net income attributable to BlackRock |
$ |
1,366 |
|
|
$ |
1,077 |
|
|
$ |
2,523 |
|
|
$ |
2,513 |
|
Diluted earnings per common share |
$ |
9.06 |
|
|
$ |
7.06 |
|
|
$ |
16.70 |
|
|
$ |
16.43 |
|
Effective tax rate |
|
24.5 |
% |
|
|
24.9 |
% |
|
|
24.7 |
% |
|
|
19.8 |
% |
As adjusted(2): |
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income |
$ |
1,675 |
|
|
$ |
1,727 |
|
|
$ |
3,186 |
|
|
$ |
3,549 |
|
Operating margin |
|
42.5 |
% |
|
|
43.7 |
% |
|
|
41.5 |
% |
|
|
43.9 |
% |
Nonoperating income (expense), less net income |
$ |
178 |
|
|
$ |
(233 |
) |
|
$ |
265 |
|
|
$ |
(298 |
) |
Net income attributable to BlackRock |
$ |
1,399 |
|
|
$ |
1,122 |
|
|
$ |
2,599 |
|
|
$ |
2,584 |
|
Diluted earnings per common share |
$ |
9.28 |
|
|
$ |
7.36 |
|
|
$ |
17.21 |
|
|
$ |
16.89 |
|
Effective tax rate |
|
24.5 |
% |
|
|
24.9 |
% |
|
|
24.7 |
% |
|
|
20.5 |
% |
Other: |
|
|
|
|
|
|
|
|
|
|
|
||||
Assets under management (end of period) |
$ |
9,425,212 |
|
|
$ |
8,487,410 |
|
|
$ |
9,425,212 |
|
|
$ |
8,487,410 |
|
Diluted weighted-average common shares outstanding |
|
150.7 |
|
|
|
152.5 |
|
|
|
151.0 |
|
|
|
153.0 |
|
Shares outstanding (end of period) |
|
149.4 |
|
|
|
151.0 |
|
|
|
149.4 |
|
|
|
151.0 |
|
Book value per share(3) |
$ |
255.79 |
|
|
$ |
245.68 |
|
|
$ |
255.79 |
|
|
$ |
245.68 |
|
Cash dividends declared and paid per share |
$ |
5.00 |
|
|
$ |
4.88 |
|
|
$ |
10.00 |
|
|
$ |
9.76 |
|
Three Months Ended June 30, 2023 Compared with Three Months Ended June 30, 2022
GAAP. Operating income of $1.6 billion decreased $53 million and operating margin of 36.2% decreased 70 bps from the three months ended June 30, 2022. Decreases in operating income and operating margin reflected lower investment advisory and administration fees (collectively "base fees"), driven by the negative impact of market movements on average AUM over the past twelve months.
Nonoperating income (expense) less net income (loss) attributable to noncontrolling interests (“NCI”) increased $427 million from the three months ended June 30, 2022, driven primarily by mark-to-market gains on the Company’s private equity co-investment portfolios, mark-to-market revaluation of un-hedged seed capital portfolio and certain minority company investments, and higher interest and dividend income.
Earnings per diluted common share increased $2.00, or 28%, from the three months ended June 30, 2022, primarily driven by higher nonoperating income in the current quarter.
As Adjusted. Operating income of $1.7 billion decreased $52 million and operating margin of 42.5% decreased 120 bps from the three months ended June 30, 2022, while earnings per diluted common share increased $1.92, or 26%, from the three months ended June 30, 2022, primarily reflecting higher nonoperating income.
38
Six Months Ended June 30, 2023 Compared with Six Months Ended June 30, 2022
GAAP. Operating income of $3.1 billion decreased $379 million and operating margin of 35.1% decreased 210 bps from the six months ended June 30, 2022. Decreases in operating income and operating margin reflected lower base fees, driven by the impact of lower markets, partially offset by lower expense.
Nonoperating income (expense) less net income (loss) attributable to NCI increased $596 million from the six months ended June 30, 2022, driven primarily by higher mark-to-market gains on the Company’s private equity co-investment portfolios, mark-to-market revaluation of Company's un-hedged seed capital portfolio and certain minority company investments, and higher interest and dividend income.
Income tax expense for the six months ended June 30, 2023 included $40 million of discrete tax benefits primarily related to stock-based compensation awards that vested in 2023, offset by a $38 million discrete tax expense related to the resolution of certain outstanding tax matters. Income tax expense for the six months ended June 30, 2022 included $133 million of discrete tax benefits related to stock-based compensation awards that vested in 2022 and the resolution of certain outstanding tax matters, and $18 million of net noncash tax benefits related to the revaluation of certain deferred income tax liabilities. See Income Tax Expense within Discussion of Financial Results for more information.
Earnings per diluted common share increased $0.27 or 2%, from the six months ended June 30, 2022, primarily reflecting higher nonoperating income, partially offset by lower operating income and a higher effective tax rate.
As Adjusted. Operating income of $3.2 billion decreased $363 million and operating margin of 41.5% decreased 240 bps from the six months ended June 30, 2022.
Earnings per diluted common share increased $0.32, or 2%, from the six months ended June 30, 2022. Income tax expense for the six months ended June 30, 2022 excluded the $18 million net noncash benefit described above.
Beginning in the first quarter of 2023, BlackRock updated its definitions of operating income, as adjusted, operating margin, as adjusted, nonoperating income (expense), as adjusted, and net income attributable to BlackRock, Inc., as adjusted, to exclude the compensation expense related to the market valuation changes on certain deferred cash compensation plans, and the related nonoperating gain (loss) impact of an economic hedge of these deferred cash compensation plans. See Non-GAAP Financial Measures for further information on as adjusted items and the reconciliation to GAAP.
For further discussion of BlackRock’s revenue, expense, nonoperating results and income tax expense, see Discussion of Financial Results herein.
39
NON-GAAP FINANCIAL MEASURES
BlackRock reports its financial results in accordance with GAAP; however, management believes evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP financial measures. Adjustments to GAAP financial measures (“non-GAAP adjustments”) include certain items management deems nonrecurring or that occur infrequently, transactions that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow. Management reviews non-GAAP financial measures, in addition to GAAP financial measures, to assess ongoing operations and considers them to be helpful, for both management and investors, in evaluating BlackRock’s financial performance over time. Management also uses non-GAAP financial measures as a benchmark to compare its performance with other companies and to enhance comparability for the reporting periods presented. Non-GAAP financial measures may pose limitations because they do not include all of BlackRock’s revenue and expense. BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.
Beginning in the first quarter of 2023, BlackRock updated its definitions of operating income, as adjusted, operating margin, as adjusted, nonoperating income (expense), as adjusted, and net income attributable to BlackRock, Inc., as adjusted, to exclude the compensation expense related to the market valuation changes on certain deferred cash compensation plans, and the related nonoperating gain (loss) impact of an economic hedge of these deferred cash compensation plans.
Computations and reconciliations for all periods are derived from the condensed consolidated statements of income as follows:
40
(1) Operating income, as adjusted, and operating margin, as adjusted:
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Operating income, GAAP basis |
$ |
1,615 |
|
|
$ |
1,668 |
|
|
$ |
3,053 |
|
|
$ |
3,432 |
|
Non-GAAP expense adjustments: |
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation expense related to appreciation (depreciation) |
|
12 |
|
|
|
— |
|
|
|
32 |
|
|
|
— |
|
Amortization of intangible assets (b) |
|
37 |
|
|
|
38 |
|
|
|
74 |
|
|
|
76 |
|
Acquisition-related compensation costs (b) |
|
4 |
|
|
|
6 |
|
|
|
9 |
|
|
|
13 |
|
Acquisition-related transaction costs (b)(1) |
|
3 |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
Contingent consideration fair value adjustments (b) |
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
Lease costs - New York (c) |
|
3 |
|
|
|
15 |
|
|
|
14 |
|
|
|
27 |
|
Operating income, as adjusted |
$ |
1,675 |
|
|
$ |
1,727 |
|
|
$ |
3,186 |
|
|
$ |
3,549 |
|
Revenue, GAAP basis |
$ |
4,463 |
|
|
$ |
4,526 |
|
|
$ |
8,706 |
|
|
$ |
9,225 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
||||
Distribution fees |
|
(319 |
) |
|
|
(361 |
) |
|
|
(638 |
) |
|
|
(742 |
) |
Investment advisory fees |
|
(199 |
) |
|
|
(211 |
) |
|
|
(385 |
) |
|
|
(404 |
) |
Revenue used for operating margin measurement |
$ |
3,945 |
|
|
$ |
3,954 |
|
|
$ |
7,683 |
|
|
$ |
8,079 |
|
Operating margin, GAAP basis |
|
36.2 |
% |
|
|
36.9 |
% |
|
|
35.1 |
% |
|
|
37.2 |
% |
Operating margin, as adjusted |
|
42.5 |
% |
|
|
43.7 |
% |
|
|
41.5 |
% |
|
|
43.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||
(2) Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted:
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Nonoperating income (expense), GAAP basis |
$ |
251 |
|
|
$ |
(347 |
) |
|
$ |
367 |
|
|
$ |
(485 |
) |
Less: Net income (loss) attributable to NCI |
|
57 |
|
|
|
(114 |
) |
|
|
69 |
|
|
|
(187 |
) |
Nonoperating income (expense), net of NCI |
|
194 |
|
|
|
(233 |
) |
|
|
298 |
|
|
|
(298 |
) |
Less: Hedge gain (loss) on deferred cash compensation plans (a) |
|
16 |
|
|
|
— |
|
|
|
33 |
|
|
|
— |
|
Nonoperating income (expense), less net income (loss) |
$ |
178 |
|
|
$ |
(233 |
) |
|
$ |
265 |
|
|
$ |
(298 |
) |
(3) Net income attributable to BlackRock, Inc., as adjusted:
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions, except per share data) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net income attributable to BlackRock, Inc., GAAP basis |
$ |
1,366 |
|
|
$ |
1,077 |
|
|
$ |
2,523 |
|
|
$ |
2,513 |
|
Non-GAAP adjustments(1): |
|
|
|
|
|
|
|
|
|
|
|
||||
Net impact of hedged deferred cash compensation plans (a) |
|
(3 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
Amortization of intangible assets (b) |
|
28 |
|
|
|
29 |
|
|
|
56 |
|
|
|
58 |
|
Acquisition-related compensation costs (b) |
|
3 |
|
|
|
5 |
|
|
|
7 |
|
|
|
10 |
|
Acquisition-related transaction costs (b) |
|
2 |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
Contingent consideration fair value adjustments (b) |
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
Lease costs - New York (c) |
|
2 |
|
|
|
11 |
|
|
|
11 |
|
|
|
20 |
|
Income tax matters |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(18 |
) |
Net income attributable to BlackRock, Inc., as adjusted |
$ |
1,399 |
|
|
$ |
1,122 |
|
|
$ |
2,599 |
|
|
$ |
2,584 |
|
Diluted weighted-average common shares outstanding |
|
150.7 |
|
|
|
152.5 |
|
|
|
151.0 |
|
|
|
153.0 |
|
Diluted earnings per common share, GAAP basis |
$ |
9.06 |
|
|
$ |
7.06 |
|
|
$ |
16.70 |
|
|
$ |
16.43 |
|
Diluted earnings per common share, as adjusted |
$ |
9.28 |
|
|
$ |
7.36 |
|
|
$ |
17.21 |
|
|
$ |
16.89 |
|
41
(1) Operating income, as adjusted, and operating margin, as adjusted: Management believes operating income, as adjusted, and operating margin, as adjusted, are effective indicators of BlackRock’s financial performance over time, and, therefore, provide useful disclosure to investors. Management believes that operating margin, as adjusted, reflects the Company’s long-term ability to manage ongoing costs in relation to its revenues. The Company uses operating margin, as adjusted, to assess the Company’s financial performance, to determine the long-term and annual compensation of the Company’s senior-level employees and to evaluate the Company’s relative performance against industry peers. Furthermore, this metric eliminates margin variability arising from the accounting of revenues and expenses related to distributing different product structures in multiple distribution channels utilized by asset managers.
42
(2) Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted: Management believes nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, is an effective measure for reviewing BlackRock’s nonoperating contribution to its results and provides comparability of this information among reporting periods. Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, excludes the gain (loss) on the economic hedge of certain deferred cash compensation plans. As the gain (loss) on investments and derivatives used to hedge these compensation plans over time substantially offsets the compensation expense related to the market valuation changes on these deferred cash compensation plans, which is included in operating income, GAAP basis, management believes excluding the gain (loss) on the economic hedge of the deferred cash compensation plans when calculating nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, provides a useful measure for both management and investors of BlackRock’s nonoperating results that impact book value.
(3) Net income attributable to BlackRock, Inc., as adjusted: Management believes net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock’s profitability and financial performance. Net income attributable to BlackRock, Inc., as adjusted, equals net income attributable to BlackRock, Inc., GAAP basis, adjusted for certain items management deems nonrecurring or that occur infrequently, transactions that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow.
See notes (1) and (2) above regarding operating income, as adjusted, for information on the updated presentation of non-GAAP adjustments. For each period presented, the non-GAAP adjustments were tax effected at the respective blended rates applicable to the adjustments. Amounts for income tax matters represent net noncash (benefit) expense primarily associated with the revaluation of certain deferred tax liabilities related to intangible assets and goodwill as a result of tax rate changes. These amounts have been excluded from the as adjusted results as these items will not have a cash flow impact and to enhance comparability among periods presented.
Per share amounts reflect net income attributable to BlackRock, Inc., as adjusted divided by diluted weighted-average common shares outstanding.
43
ASSETS UNDER MANAGEMENT
AUM for reporting purposes generally is based upon how investment advisory and administration fees are calculated for each portfolio. Net asset values, total assets, committed assets or other measures may be used to determine portfolio AUM.
AUM and Net Inflows (Outflows) by Client Type and Product Type |
|
||||||||||||||||||||||||||
|
AUM |
|
|
Net inflows (outflows) |
|
||||||||||||||||||||||
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
June 30, |
|
|
Three Months |
|
|
Six Months |
|
|
Twelve Months |
|
|||||||
(in millions) |
2023 |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
|
2023 |
|
|||||||
Retail |
$ |
903,630 |
|
|
$ |
876,979 |
|
|
$ |
843,475 |
|
|
$ |
863,425 |
|
|
$ |
3,789 |
|
|
$ |
4,071 |
|
|
$ |
(15,641 |
) |
ETFs |
|
3,215,932 |
|
|
|
3,074,303 |
|
|
|
2,909,610 |
|
|
|
2,784,296 |
|
|
|
47,993 |
|
|
|
69,700 |
|
|
|
181,722 |
|
Institutional: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Active |
|
1,812,719 |
|
|
|
1,778,340 |
|
|
|
1,641,591 |
|
|
|
1,510,862 |
|
|
|
9,392 |
|
|
|
80,925 |
|
|
|
228,077 |
|
Index |
|
2,782,790 |
|
|
|
2,677,711 |
|
|
|
2,528,615 |
|
|
|
2,580,603 |
|
|
|
(4,483 |
) |
|
|
4,693 |
|
|
|
(23,876 |
) |
Institutional subtotal |
|
4,595,509 |
|
|
|
4,456,051 |
|
|
|
4,170,206 |
|
|
|
4,091,465 |
|
|
|
4,909 |
|
|
|
85,618 |
|
|
|
204,201 |
|
Long-term |
|
8,715,071 |
|
|
|
8,407,333 |
|
|
|
7,923,291 |
|
|
|
7,739,186 |
|
|
|
56,691 |
|
|
|
159,389 |
|
|
|
370,282 |
|
Cash management |
|
710,141 |
|
|
|
682,938 |
|
|
|
671,194 |
|
|
|
739,457 |
|
|
|
23,471 |
|
|
|
31,090 |
|
|
|
(40,407 |
) |
Advisory |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,767 |
|
|
|
— |
|
|
|
— |
|
|
|
(8,764 |
) |
Total |
$ |
9,425,212 |
|
|
$ |
9,090,271 |
|
|
$ |
8,594,485 |
|
|
$ |
8,487,410 |
|
|
$ |
80,162 |
|
|
$ |
190,479 |
|
|
$ |
321,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
AUM and Net Inflows (Outflows) by Investment Style and Product Type |
|
||||||||||||||||||||||||||
|
AUM |
|
|
Net inflows (outflows) |
|
||||||||||||||||||||||
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
June 30, |
|
|
Three Months |
|
|
Six Months |
|
|
Twelve Months |
|
|||||||
(in millions) |
2023 |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
|
2023 |
|
|||||||
Active |
$ |
2,516,396 |
|
|
$ |
2,474,034 |
|
|
$ |
2,317,560 |
|
|
$ |
2,210,648 |
|
|
$ |
4,435 |
|
|
$ |
72,726 |
|
|
$ |
198,154 |
|
Index and ETFs |
|
6,198,675 |
|
|
|
5,933,299 |
|
|
|
5,605,731 |
|
|
|
5,528,538 |
|
|
|
52,256 |
|
|
|
86,663 |
|
|
|
172,128 |
|
Long-term |
|
8,715,071 |
|
|
|
8,407,333 |
|
|
|
7,923,291 |
|
|
|
7,739,186 |
|
|
|
56,691 |
|
|
|
159,389 |
|
|
|
370,282 |
|
Cash management |
|
710,141 |
|
|
|
682,938 |
|
|
|
671,194 |
|
|
|
739,457 |
|
|
|
23,471 |
|
|
|
31,090 |
|
|
|
(40,407 |
) |
Advisory |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,767 |
|
|
|
— |
|
|
|
— |
|
|
|
(8,764 |
) |
Total |
$ |
9,425,212 |
|
|
$ |
9,090,271 |
|
|
$ |
8,594,485 |
|
|
$ |
8,487,410 |
|
|
$ |
80,162 |
|
|
$ |
190,479 |
|
|
$ |
321,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
AUM and Net Inflows (Outflows) by Product Type |
|
||||||||||||||||||||||||||
|
AUM |
|
|
Net inflows (outflows) |
|
||||||||||||||||||||||
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
June 30, |
|
|
Three Months |
|
|
Six Months |
|
|
Twelve Months |
|
|||||||
(in millions) |
2023 |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
|
2023 |
|
|||||||
Equity |
$ |
4,961,344 |
|
|
$ |
4,707,344 |
|
|
$ |
4,435,354 |
|
|
$ |
4,345,120 |
|
|
$ |
(4,317 |
) |
|
$ |
(11,108 |
) |
|
$ |
(10,671 |
) |
Fixed income |
|
2,668,851 |
|
|
|
2,653,744 |
|
|
|
2,536,823 |
|
|
|
2,439,844 |
|
|
|
43,821 |
|
|
|
97,697 |
|
|
|
303,828 |
|
Multi-asset |
|
811,927 |
|
|
|
771,880 |
|
|
|
684,904 |
|
|
|
678,465 |
|
|
|
17,365 |
|
|
|
71,040 |
|
|
|
83,210 |
|
Alternatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Illiquid alternatives |
|
127,678 |
|
|
|
123,416 |
|
|
|
117,751 |
|
|
|
112,039 |
|
|
|
3,049 |
|
|
|
7,481 |
|
|
|
14,246 |
|
Liquid alternatives |
|
78,056 |
|
|
|
80,151 |
|
|
|
80,654 |
|
|
|
83,770 |
|
|
|
(2,485 |
) |
|
|
(4,610 |
) |
|
|
(7,275 |
) |
Currency and commodities(1) |
|
67,215 |
|
|
|
70,798 |
|
|
|
67,805 |
|
|
|
79,948 |
|
|
|
(742 |
) |
|
|
(1,111 |
) |
|
|
(13,056 |
) |
Alternatives subtotal |
|
272,949 |
|
|
|
274,365 |
|
|
|
266,210 |
|
|
|
275,757 |
|
|
|
(178 |
) |
|
|
1,760 |
|
|
|
(6,085 |
) |
Long-term |
|
8,715,071 |
|
|
|
8,407,333 |
|
|
|
7,923,291 |
|
|
|
7,739,186 |
|
|
|
56,691 |
|
|
|
159,389 |
|
|
|
370,282 |
|
Cash management |
|
710,141 |
|
|
|
682,938 |
|
|
|
671,194 |
|
|
|
739,457 |
|
|
|
23,471 |
|
|
|
31,090 |
|
|
|
(40,407 |
) |
Advisory |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,767 |
|
|
|
— |
|
|
|
— |
|
|
|
(8,764 |
) |
Total |
$ |
9,425,212 |
|
|
$ |
9,090,271 |
|
|
$ |
8,594,485 |
|
|
$ |
8,487,410 |
|
|
$ |
80,162 |
|
|
$ |
190,479 |
|
|
$ |
321,111 |
|
44
Component Changes in AUM for the Three Months Ended June 30, 2023
The following table presents the component changes in AUM by client type and product type for the three months ended June 30, 2023.
|
March 31, |
|
|
Net |
|
|
Market |
|
|
FX |
|
|
June 30, |
|
|
Average |
|
||||||
(in millions) |
2023 |
|
|
(outflows) |
|
|
change |
|
|
impact(1) |
|
|
2023 |
|
|
AUM(2) |
|
||||||
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
$ |
394,274 |
|
|
$ |
1,997 |
|
|
$ |
17,687 |
|
|
$ |
1,517 |
|
|
$ |
415,475 |
|
|
$ |
400,742 |
|
Fixed income |
|
305,937 |
|
|
|
4,361 |
|
|
|
(2,161 |
) |
|
|
1,312 |
|
|
|
309,449 |
|
|
|
307,599 |
|
Multi-asset |
|
128,681 |
|
|
|
546 |
|
|
|
4,130 |
|
|
|
189 |
|
|
|
133,546 |
|
|
|
131,273 |
|
Alternatives |
|
48,087 |
|
|
|
(3,115 |
) |
|
|
84 |
|
|
|
104 |
|
|
|
45,160 |
|
|
|
46,614 |
|
Retail subtotal |
|
876,979 |
|
|
|
3,789 |
|
|
|
19,740 |
|
|
|
3,122 |
|
|
|
903,630 |
|
|
|
886,228 |
|
ETFs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
2,191,437 |
|
|
|
13,889 |
|
|
|
102,818 |
|
|
|
910 |
|
|
|
2,309,054 |
|
|
|
2,220,744 |
|
Fixed income |
|
810,776 |
|
|
|
34,741 |
|
|
|
(8,499 |
) |
|
|
741 |
|
|
|
837,759 |
|
|
|
824,579 |
|
Multi-asset |
|
7,688 |
|
|
|
(24 |
) |
|
|
182 |
|
|
|
46 |
|
|
|
7,892 |
|
|
|
7,715 |
|
Alternatives |
|
64,402 |
|
|
|
(613 |
) |
|
|
(2,595 |
) |
|
|
33 |
|
|
|
61,227 |
|
|
|
63,996 |
|
ETFs subtotal |
|
3,074,303 |
|
|
|
47,993 |
|
|
|
91,906 |
|
|
|
1,730 |
|
|
|
3,215,932 |
|
|
|
3,117,034 |
|
Institutional: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Active: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
176,053 |
|
|
|
(6,439 |
) |
|
|
8,011 |
|
|
|
432 |
|
|
|
178,057 |
|
|
|
176,835 |
|
Fixed income |
|
814,637 |
|
|
|
(4,650 |
) |
|
|
(2,698 |
) |
|
|
(122 |
) |
|
|
807,167 |
|
|
|
811,375 |
|
Multi-asset |
|
629,018 |
|
|
|
16,930 |
|
|
|
15,544 |
|
|
|
2,577 |
|
|
|
664,069 |
|
|
|
641,330 |
|
Alternatives |
|
158,632 |
|
|
|
3,551 |
|
|
|
972 |
|
|
|
271 |
|
|
|
163,426 |
|
|
|
160,607 |
|
Active subtotal |
|
1,778,340 |
|
|
|
9,392 |
|
|
|
21,829 |
|
|
|
3,158 |
|
|
|
1,812,719 |
|
|
|
1,790,147 |
|
Index: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
1,945,580 |
|
|
|
(13,764 |
) |
|
|
136,617 |
|
|
|
(9,675 |
) |
|
|
2,058,758 |
|
|
|
1,979,995 |
|
Fixed income |
|
722,394 |
|
|
|
9,369 |
|
|
|
(10,514 |
) |
|
|
(6,773 |
) |
|
|
714,476 |
|
|
|
716,052 |
|
Multi-asset |
|
6,493 |
|
|
|
(87 |
) |
|
|
112 |
|
|
|
(98 |
) |
|
|
6,420 |
|
|
|
6,387 |
|
Alternatives |
|
3,244 |
|
|
|
(1 |
) |
|
|
(84 |
) |
|
|
(23 |
) |
|
|
3,136 |
|
|
|
3,159 |
|
Index subtotal |
|
2,677,711 |
|
|
|
(4,483 |
) |
|
|
126,131 |
|
|
|
(16,569 |
) |
|
|
2,782,790 |
|
|
|
2,705,593 |
|
Institutional subtotal |
|
4,456,051 |
|
|
|
4,909 |
|
|
|
147,960 |
|
|
|
(13,411 |
) |
|
|
4,595,509 |
|
|
|
4,495,740 |
|
Long-term |
|
8,407,333 |
|
|
|
56,691 |
|
|
|
259,606 |
|
|
|
(8,559 |
) |
|
|
8,715,071 |
|
|
|
8,499,002 |
|
Cash management |
|
682,938 |
|
|
|
23,471 |
|
|
|
1,886 |
|
|
|
1,846 |
|
|
|
710,141 |
|
|
|
688,238 |
|
Total |
$ |
9,090,271 |
|
|
$ |
80,162 |
|
|
$ |
261,492 |
|
|
$ |
(6,713 |
) |
|
$ |
9,425,212 |
|
|
$ |
9,187,240 |
|
45
The following table presents the component changes in AUM by investment style and product type for the three months ended June 30, 2023.
|
March 31, |
|
|
Net |
|
|
Market |
|
|
FX |
|
|
June 30, |
|
|
Average |
|
||||||
(in millions) |
2023 |
|
|
(outflows) |
|
|
change |
|
|
impact(1) |
|
|
2023 |
|
|
AUM(2) |
|
||||||
Active: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
$ |
410,889 |
|
|
$ |
(9,729 |
) |
|
$ |
16,548 |
|
|
$ |
955 |
|
|
$ |
418,663 |
|
|
$ |
412,335 |
|
Fixed income |
|
1,098,737 |
|
|
|
(3,747 |
) |
|
|
(4,249 |
) |
|
|
803 |
|
|
|
1,091,544 |
|
|
|
1,095,152 |
|
Multi-asset |
|
757,692 |
|
|
|
17,475 |
|
|
|
19,672 |
|
|
|
2,766 |
|
|
|
797,605 |
|
|
|
772,595 |
|
Alternatives |
|
206,716 |
|
|
|
436 |
|
|
|
1,057 |
|
|
|
375 |
|
|
|
208,584 |
|
|
|
207,220 |
|
Active subtotal |
|
2,474,034 |
|
|
|
4,435 |
|
|
|
33,028 |
|
|
|
4,899 |
|
|
|
2,516,396 |
|
|
|
2,487,302 |
|
Index and ETFs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
ETFs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
2,191,437 |
|
|
|
13,889 |
|
|
|
102,818 |
|
|
|
910 |
|
|
|
2,309,054 |
|
|
|
2,220,744 |
|
Fixed income |
|
810,776 |
|
|
|
34,741 |
|
|
|
(8,499 |
) |
|
|
741 |
|
|
|
837,759 |
|
|
|
824,579 |
|
Multi-asset |
|
7,688 |
|
|
|
(24 |
) |
|
|
182 |
|
|
|
46 |
|
|
|
7,892 |
|
|
|
7,715 |
|
Alternatives |
|
64,402 |
|
|
|
(613 |
) |
|
|
(2,595 |
) |
|
|
33 |
|
|
|
61,227 |
|
|
|
63,996 |
|
ETFs subtotal |
|
3,074,303 |
|
|
|
47,993 |
|
|
|
91,906 |
|
|
|
1,730 |
|
|
|
3,215,932 |
|
|
|
3,117,034 |
|
Non-ETF Index: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
2,105,018 |
|
|
|
(8,477 |
) |
|
|
145,767 |
|
|
|
(8,681 |
) |
|
|
2,233,627 |
|
|
|
2,145,237 |
|
Fixed income |
|
744,231 |
|
|
|
12,827 |
|
|
|
(11,124 |
) |
|
|
(6,386 |
) |
|
|
739,548 |
|
|
|
739,874 |
|
Multi-asset |
|
6,500 |
|
|
|
(86 |
) |
|
|
114 |
|
|
|
(98 |
) |
|
|
6,430 |
|
|
|
6,395 |
|
Alternatives |
|
3,247 |
|
|
|
(1 |
) |
|
|
(85 |
) |
|
|
(23 |
) |
|
|
3,138 |
|
|
|
3,160 |
|
Non-ETF Index subtotal |
|
2,858,996 |
|
|
|
4,263 |
|
|
|
134,672 |
|
|
|
(15,188 |
) |
|
|
2,982,743 |
|
|
|
2,894,666 |
|
Index & ETFs subtotal |
|
5,933,299 |
|
|
|
52,256 |
|
|
|
226,578 |
|
|
|
(13,458 |
) |
|
|
6,198,675 |
|
|
|
6,011,700 |
|
Long-term |
|
8,407,333 |
|
|
|
56,691 |
|
|
|
259,606 |
|
|
|
(8,559 |
) |
|
|
8,715,071 |
|
|
|
8,499,002 |
|
Cash management |
|
682,938 |
|
|
|
23,471 |
|
|
|
1,886 |
|
|
|
1,846 |
|
|
|
710,141 |
|
|
|
688,238 |
|
Total |
$ |
9,090,271 |
|
|
$ |
80,162 |
|
|
$ |
261,492 |
|
|
$ |
(6,713 |
) |
|
$ |
9,425,212 |
|
|
$ |
9,187,240 |
|
The following table presents the component changes in AUM by product type for the three months ended June 30, 2023.
|
March 31, |
|
|
Net |
|
|
Market |
|
|
FX |
|
|
June 30, |
|
|
Average |
|
||||||
(in millions) |
2023 |
|
|
(outflows) |
|
|
change |
|
|
impact(1) |
|
|
2023 |
|
|
AUM(2) |
|
||||||
Equity |
$ |
4,707,344 |
|
|
$ |
(4,317 |
) |
|
$ |
265,133 |
|
|
$ |
(6,816 |
) |
|
$ |
4,961,344 |
|
|
$ |
4,778,316 |
|
Fixed income |
|
2,653,744 |
|
|
|
43,821 |
|
|
|
(23,872 |
) |
|
|
(4,842 |
) |
|
|
2,668,851 |
|
|
|
2,659,605 |
|
Multi-asset |
|
771,880 |
|
|
|
17,365 |
|
|
|
19,968 |
|
|
|
2,714 |
|
|
|
811,927 |
|
|
|
786,705 |
|
Alternatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Illiquid alternatives |
|
123,416 |
|
|
|
3,049 |
|
|
|
856 |
|
|
|
357 |
|
|
|
127,678 |
|
|
|
125,350 |
|
Liquid alternatives |
|
80,151 |
|
|
|
(2,485 |
) |
|
|
276 |
|
|
|
114 |
|
|
|
78,056 |
|
|
|
78,905 |
|
Currency and commodities(3) |
|
70,798 |
|
|
|
(742 |
) |
|
|
(2,755 |
) |
|
|
(86 |
) |
|
|
67,215 |
|
|
|
70,121 |
|
Alternatives subtotal |
|
274,365 |
|
|
|
(178 |
) |
|
|
(1,623 |
) |
|
|
385 |
|
|
|
272,949 |
|
|
|
274,376 |
|
Long-term |
|
8,407,333 |
|
|
|
56,691 |
|
|
|
259,606 |
|
|
|
(8,559 |
) |
|
|
8,715,071 |
|
|
|
8,499,002 |
|
Cash management |
|
682,938 |
|
|
|
23,471 |
|
|
|
1,886 |
|
|
|
1,846 |
|
|
|
710,141 |
|
|
|
688,238 |
|
Total |
$ |
9,090,271 |
|
|
$ |
80,162 |
|
|
$ |
261,492 |
|
|
$ |
(6,713 |
) |
|
$ |
9,425,212 |
|
|
$ |
9,187,240 |
|
46
AUM increased $335 billion to $9.4 trillion at June 30, 2023 from $9.1 trillion at March 31, 2023, driven primarily by net market appreciation and net inflows.
Long-term net inflows of $57 billion were comprised of net inflows of $48 billion, $5 billion and $4 billion from ETFs, institutional clients and retail, respectively. Net flows in long-term products are described below.
Cash management AUM increased to $710 billion, driven by net inflows into US government money market funds.
Net market appreciation of $261 billion was primarily driven by global equity market appreciation.
AUM decreased $7 billion due to the impact of foreign exchange movements, primarily resulting from the strengthening of the US dollar against the Japanese yen, partially offset by the weakening of the US dollar largely against the British pound.
47
Component Changes in AUM for the Six Months Ended June 30, 2023
The following table presents the component changes in AUM by client type and product type for the six months ended June 30, 2023.
|
December 31, |
|
|
Net |
|
|
Market |
|
|
FX |
|
|
June 30, |
|
|
Average |
|
||||||
(in millions) |
2022 |
|
|
(outflows) |
|
|
change |
|
|
impact(1) |
|
|
2023 |
|
|
AUM(2) |
|
||||||
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
$ |
370,612 |
|
|
$ |
3,995 |
|
|
$ |
37,415 |
|
|
$ |
3,453 |
|
|
$ |
415,475 |
|
|
$ |
396,013 |
|
Fixed income |
|
299,114 |
|
|
|
4,782 |
|
|
|
2,052 |
|
|
|
3,501 |
|
|
|
309,449 |
|
|
|
306,870 |
|
Multi-asset |
|
125,168 |
|
|
|
(599 |
) |
|
|
8,471 |
|
|
|
506 |
|
|
|
133,546 |
|
|
|
129,891 |
|
Alternatives |
|
48,581 |
|
|
|
(4,107 |
) |
|
|
414 |
|
|
|
272 |
|
|
|
45,160 |
|
|
|
47,489 |
|
Retail subtotal |
|
843,475 |
|
|
|
4,071 |
|
|
|
48,352 |
|
|
|
7,732 |
|
|
|
903,630 |
|
|
|
880,263 |
|
ETFs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
2,081,742 |
|
|
|
3,784 |
|
|
|
219,991 |
|
|
|
3,537 |
|
|
|
2,309,054 |
|
|
|
2,192,715 |
|
Fixed income |
|
758,093 |
|
|
|
68,254 |
|
|
|
9,146 |
|
|
|
2,266 |
|
|
|
837,759 |
|
|
|
803,927 |
|
Multi-asset |
|
8,875 |
|
|
|
(1,651 |
) |
|
|
620 |
|
|
|
48 |
|
|
|
7,892 |
|
|
|
7,904 |
|
Alternatives |
|
60,900 |
|
|
|
(687 |
) |
|
|
964 |
|
|
|
50 |
|
|
|
61,227 |
|
|
|
62,526 |
|
ETFs subtotal |
|
2,909,610 |
|
|
|
69,700 |
|
|
|
230,721 |
|
|
|
5,901 |
|
|
|
3,215,932 |
|
|
|
3,067,072 |
|
Institutional: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Active: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
168,734 |
|
|
|
(10,121 |
) |
|
|
17,995 |
|
|
|
1,449 |
|
|
|
178,057 |
|
|
|
173,796 |
|
Fixed income |
|
774,955 |
|
|
|
11,052 |
|
|
|
19,312 |
|
|
|
1,848 |
|
|
|
807,167 |
|
|
|
801,706 |
|
Multi-asset |
|
544,469 |
|
|
|
73,516 |
|
|
|
40,679 |
|
|
|
5,405 |
|
|
|
664,069 |
|
|
|
617,997 |
|
Alternatives |
|
153,433 |
|
|
|
6,478 |
|
|
|
2,698 |
|
|
|
817 |
|
|
|
163,426 |
|
|
|
158,477 |
|
Active subtotal |
|
1,641,591 |
|
|
|
80,925 |
|
|
|
80,684 |
|
|
|
9,519 |
|
|
|
1,812,719 |
|
|
|
1,751,976 |
|
Index: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
1,814,266 |
|
|
|
(8,766 |
) |
|
|
258,022 |
|
|
|
(4,764 |
) |
|
|
2,058,758 |
|
|
|
1,942,828 |
|
Fixed income |
|
704,661 |
|
|
|
13,609 |
|
|
|
(2,061 |
) |
|
|
(1,733 |
) |
|
|
714,476 |
|
|
|
714,153 |
|
Multi-asset |
|
6,392 |
|
|
|
(226 |
) |
|
|
362 |
|
|
|
(108 |
) |
|
|
6,420 |
|
|
|
6,429 |
|
Alternatives |
|
3,296 |
|
|
|
76 |
|
|
|
(216 |
) |
|
|
(20 |
) |
|
|
3,136 |
|
|
|
3,204 |
|
Index subtotal |
|
2,528,615 |
|
|
|
4,693 |
|
|
|
256,107 |
|
|
|
(6,625 |
) |
|
|
2,782,790 |
|
|
|
2,666,614 |
|
Institutional subtotal |
|
4,170,206 |
|
|
|
85,618 |
|
|
|
336,791 |
|
|
|
2,894 |
|
|
|
4,595,509 |
|
|
|
4,418,590 |
|
Long-term |
|
7,923,291 |
|
|
|
159,389 |
|
|
|
615,864 |
|
|
|
16,527 |
|
|
|
8,715,071 |
|
|
|
8,365,925 |
|
Cash management |
|
671,194 |
|
|
|
31,090 |
|
|
|
3,704 |
|
|
|
4,153 |
|
|
|
710,141 |
|
|
|
672,509 |
|
Total |
$ |
8,594,485 |
|
|
$ |
190,479 |
|
|
$ |
619,568 |
|
|
$ |
20,680 |
|
|
$ |
9,425,212 |
|
|
$ |
9,038,434 |
|
48
The following table presents the component changes in AUM by investment style and product type for the six months ended June 30, 2023.
|
December 31, |
|
|
Net |
|
|
Market |
|
|
FX |
|
|
June 30, |
|
|
Average |
|
||||||
(in millions) |
2022 |
|
|
(outflows) |
|
|
change |
|
|
impact(1) |
|
|
2023 |
|
|
AUM(2) |
|
||||||
Active: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
$ |
392,836 |
|
|
$ |
(14,822 |
) |
|
$ |
37,748 |
|
|
$ |
2,901 |
|
|
$ |
418,663 |
|
|
$ |
409,793 |
|
Fixed income |
|
1,053,083 |
|
|
|
12,260 |
|
|
|
21,631 |
|
|
|
4,570 |
|
|
|
1,091,544 |
|
|
|
1,085,735 |
|
Multi-asset |
|
669,629 |
|
|
|
72,918 |
|
|
|
49,147 |
|
|
|
5,911 |
|
|
|
797,605 |
|
|
|
747,880 |
|
Alternatives |
|
202,012 |
|
|
|
2,370 |
|
|
|
3,113 |
|
|
|
1,089 |
|
|
|
208,584 |
|
|
|
205,966 |
|
Active subtotal |
|
2,317,560 |
|
|
|
72,726 |
|
|
|
111,639 |
|
|
|
14,471 |
|
|
|
2,516,396 |
|
|
|
2,449,374 |
|
Index and ETFs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
ETFs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
2,081,742 |
|
|
|
3,784 |
|
|
|
219,991 |
|
|
|
3,537 |
|
|
|
2,309,054 |
|
|
|
2,192,715 |
|
Fixed income |
|
758,093 |
|
|
|
68,254 |
|
|
|
9,146 |
|
|
|
2,266 |
|
|
|
837,759 |
|
|
|
803,927 |
|
Multi-asset |
|
8,875 |
|
|
|
(1,651 |
) |
|
|
620 |
|
|
|
48 |
|
|
|
7,892 |
|
|
|
7,904 |
|
Alternatives |
|
60,900 |
|
|
|
(687 |
) |
|
|
964 |
|
|
|
50 |
|
|
|
61,227 |
|
|
|
62,526 |
|
ETFs subtotal |
|
2,909,610 |
|
|
|
69,700 |
|
|
|
230,721 |
|
|
|
5,901 |
|
|
|
3,215,932 |
|
|
|
3,067,072 |
|
Non-ETF Index: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
1,960,776 |
|
|
|
(70 |
) |
|
|
275,684 |
|
|
|
(2,763 |
) |
|
|
2,233,627 |
|
|
|
2,102,844 |
|
Fixed income |
|
725,647 |
|
|
|
17,183 |
|
|
|
(2,328 |
) |
|
|
(954 |
) |
|
|
739,548 |
|
|
|
736,994 |
|
Multi-asset |
|
6,400 |
|
|
|
(227 |
) |
|
|
365 |
|
|
|
(108 |
) |
|
|
6,430 |
|
|
|
6,437 |
|
Alternatives |
|
3,298 |
|
|
|
77 |
|
|
|
(217 |
) |
|
|
(20 |
) |
|
|
3,138 |
|
|
|
3,204 |
|
Non-ETF Index subtotal |
|
2,696,121 |
|
|
|
16,963 |
|
|
|
273,504 |
|
|
|
(3,845 |
) |
|
|
2,982,743 |
|
|
|
2,849,479 |
|
Index & ETFs subtotal |
|
5,605,731 |
|
|
|
86,663 |
|
|
|
504,225 |
|
|
|
2,056 |
|
|
|
6,198,675 |
|
|
|
5,916,551 |
|
Long-term |
|
7,923,291 |
|
|
|
159,389 |
|
|
|
615,864 |
|
|
|
16,527 |
|
|
|
8,715,071 |
|
|
|
8,365,925 |
|
Cash management |
|
671,194 |
|
|
|
31,090 |
|
|
|
3,704 |
|
|
|
4,153 |
|
|
|
710,141 |
|
|
|
672,509 |
|
Total |
$ |
8,594,485 |
|
|
$ |
190,479 |
|
|
$ |
619,568 |
|
|
$ |
20,680 |
|
|
$ |
9,425,212 |
|
|
$ |
9,038,434 |
|
The following table presents the component changes in AUM by product type for the six months ended June 30, 2023.
|
December 31, |
|
|
Net |
|
|
Market |
|
|
FX |
|
|
June 30, |
|
|
Average |
|
||||||
(in millions) |
2022 |
|
|
(outflows) |
|
|
change |
|
|
impact(1) |
|
|
2023 |
|
|
AUM(2) |
|
||||||
Equity |
$ |
4,435,354 |
|
|
$ |
(11,108 |
) |
|
$ |
533,423 |
|
|
$ |
3,675 |
|
|
$ |
4,961,344 |
|
|
$ |
4,705,352 |
|
Fixed income |
|
2,536,823 |
|
|
|
97,697 |
|
|
|
28,449 |
|
|
|
5,882 |
|
|
|
2,668,851 |
|
|
|
2,626,656 |
|
Multi-asset |
|
684,904 |
|
|
|
71,040 |
|
|
|
50,132 |
|
|
|
5,851 |
|
|
|
811,927 |
|
|
|
762,221 |
|
Alternatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Illiquid alternatives |
|
117,751 |
|
|
|
7,481 |
|
|
|
1,482 |
|
|
|
964 |
|
|
|
127,678 |
|
|
|
123,067 |
|
Liquid alternatives |
|
80,654 |
|
|
|
(4,610 |
) |
|
|
1,779 |
|
|
|
233 |
|
|
|
78,056 |
|
|
|
79,714 |
|
Currency and commodities(3) |
|
67,805 |
|
|
|
(1,111 |
) |
|
|
599 |
|
|
|
(78 |
) |
|
|
67,215 |
|
|
|
68,915 |
|
Alternatives subtotal |
|
266,210 |
|
|
|
1,760 |
|
|
|
3,860 |
|
|
|
1,119 |
|
|
|
272,949 |
|
|
|
271,696 |
|
Long-term |
|
7,923,291 |
|
|
|
159,389 |
|
|
|
615,864 |
|
|
|
16,527 |
|
|
|
8,715,071 |
|
|
|
8,365,925 |
|
Cash management |
|
671,194 |
|
|
|
31,090 |
|
|
|
3,704 |
|
|
|
4,153 |
|
|
|
710,141 |
|
|
|
672,509 |
|
Total |
$ |
8,594,485 |
|
|
$ |
190,479 |
|
|
$ |
619,568 |
|
|
$ |
20,680 |
|
|
$ |
9,425,212 |
|
|
$ |
9,038,434 |
|
49
AUM increased $831 billion to $9.4 trillion at June 30, 2023 from $8.6 trillion at December 31, 2022, driven by net market appreciation, net inflows, and the positive impact of foreign exchange movements.
Long-term net inflows of $159 billion were comprised of net inflows of $86 billion, $70 billion, and $4 billion from institutional clients, ETFs and retail, respectively. Net flows in long-term products are described below.
Cash management AUM increased to $710 billion, due to net inflows into US government money market funds.
Net market appreciation of $620 billion was primarily driven by global equity market appreciation.
AUM increased $21 billion due to the impact of foreign exchange movements, primarily due to the weakening of the US dollar largely against the British pound and euro, partially offset by the strengthening of the US dollar against the Japanese yen.
50
Component Changes in AUM for the Twelve Months Ended June 30, 2023
The following table presents the component changes in AUM by client type and product type for the twelve months ended June 30, 2023.
|
June 30, |
|
|
Net |
|
|
Market |
|
|
FX |
|
|
June 30, |
|
|
Average |
|
||||||
(in millions) |
2022 |
|
|
(outflows) |
|
|
change |
|
|
impact(1) |
|
|
2023 |
|
|
AUM(2) |
|
||||||
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
$ |
371,226 |
|
|
$ |
(1,437 |
) |
|
$ |
42,414 |
|
|
$ |
3,272 |
|
|
$ |
415,475 |
|
|
$ |
385,196 |
|
Fixed income |
|
313,860 |
|
|
|
(6,058 |
) |
|
|
(2,506 |
) |
|
|
4,153 |
|
|
|
309,449 |
|
|
|
306,249 |
|
Multi-asset |
|
129,142 |
|
|
|
(3,720 |
) |
|
|
7,485 |
|
|
|
639 |
|
|
|
133,546 |
|
|
|
128,986 |
|
Alternatives |
|
49,197 |
|
|
|
(4,426 |
) |
|
|
21 |
|
|
|
368 |
|
|
|
45,160 |
|
|
|
48,090 |
|
Retail subtotal |
|
863,425 |
|
|
|
(15,641 |
) |
|
|
47,414 |
|
|
|
8,432 |
|
|
|
903,630 |
|
|
|
868,521 |
|
ETFs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
2,010,343 |
|
|
|
40,042 |
|
|
|
255,483 |
|
|
|
3,186 |
|
|
|
2,309,054 |
|
|
|
2,123,824 |
|
Fixed income |
|
695,888 |
|
|
|
152,257 |
|
|
|
(13,756 |
) |
|
|
3,370 |
|
|
|
837,759 |
|
|
|
764,009 |
|
Multi-asset |
|
7,868 |
|
|
|
(549 |
) |
|
|
614 |
|
|
|
(41 |
) |
|
|
7,892 |
|
|
|
7,851 |
|
Alternatives |
|
70,197 |
|
|
|
(10,028 |
) |
|
|
1,021 |
|
|
|
37 |
|
|
|
61,227 |
|
|
|
62,166 |
|
ETFs subtotal |
|
2,784,296 |
|
|
|
181,722 |
|
|
|
243,362 |
|
|
|
6,552 |
|
|
|
3,215,932 |
|
|
|
2,957,850 |
|
Institutional: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Active: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
163,697 |
|
|
|
(5,956 |
) |
|
|
18,789 |
|
|
|
1,527 |
|
|
|
178,057 |
|
|
|
170,136 |
|
Fixed income |
|
661,852 |
|
|
|
135,460 |
|
|
|
7,374 |
|
|
|
2,481 |
|
|
|
807,167 |
|
|
|
753,556 |
|
Multi-asset |
|
534,159 |
|
|
|
88,470 |
|
|
|
37,226 |
|
|
|
4,214 |
|
|
|
664,069 |
|
|
|
581,246 |
|
Alternatives |
|
151,154 |
|
|
|
10,103 |
|
|
|
1,169 |
|
|
|
1,000 |
|
|
|
163,426 |
|
|
|
154,626 |
|
Active subtotal |
|
1,510,862 |
|
|
|
228,077 |
|
|
|
64,558 |
|
|
|
9,222 |
|
|
|
1,812,719 |
|
|
|
1,659,564 |
|
Index: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
1,799,854 |
|
|
|
(43,320 |
) |
|
|
305,843 |
|
|
|
(3,619 |
) |
|
|
2,058,758 |
|
|
|
1,886,078 |
|
Fixed income |
|
768,244 |
|
|
|
22,169 |
|
|
|
(74,685 |
) |
|
|
(1,252 |
) |
|
|
714,476 |
|
|
|
718,640 |
|
Multi-asset |
|
7,296 |
|
|
|
(991 |
) |
|
|
212 |
|
|
|
(97 |
) |
|
|
6,420 |
|
|
|
6,680 |
|
Alternatives |
|
5,209 |
|
|
|
(1,734 |
) |
|
|
(305 |
) |
|
|
(34 |
) |
|
|
3,136 |
|
|
|
3,585 |
|
Index subtotal |
|
2,580,603 |
|
|
|
(23,876 |
) |
|
|
231,065 |
|
|
|
(5,002 |
) |
|
|
2,782,790 |
|
|
|
2,614,983 |
|
Institutional subtotal |
|
4,091,465 |
|
|
|
204,201 |
|
|
|
295,623 |
|
|
|
4,220 |
|
|
|
4,595,509 |
|
|
|
4,274,547 |
|
Long-term |
|
7,739,186 |
|
|
|
370,282 |
|
|
|
586,399 |
|
|
|
19,204 |
|
|
|
8,715,071 |
|
|
|
8,100,918 |
|
Cash management |
|
739,457 |
|
|
|
(40,407 |
) |
|
|
5,532 |
|
|
|
5,559 |
|
|
|
710,141 |
|
|
|
690,482 |
|
Advisory |
|
8,767 |
|
|
|
(8,764 |
) |
|
|
(3 |
) |
|
|
— |
|
|
|
— |
|
|
|
676 |
|
Total |
$ |
8,487,410 |
|
|
$ |
321,111 |
|
|
$ |
591,928 |
|
|
$ |
24,763 |
|
|
$ |
9,425,212 |
|
|
$ |
8,792,076 |
|
51
The following table presents the component changes in AUM by investment style and product type for the twelve months ended June 30, 2023.
|
June 30, |
|
|
Net |
|
|
Market |
|
|
FX |
|
|
June 30, |
|
|
Average |
|
||||||
(in millions) |
2022 |
|
|
(outflows) |
|
|
change |
|
|
impact(1) |
|
|
2023 |
|
|
AUM(2) |
|
||||||
Active: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
$ |
393,048 |
|
|
$ |
(17,668 |
) |
|
$ |
40,113 |
|
|
$ |
3,170 |
|
|
$ |
418,663 |
|
|
$ |
402,006 |
|
Fixed income |
|
953,957 |
|
|
|
125,397 |
|
|
|
6,236 |
|
|
|
5,954 |
|
|
|
1,091,544 |
|
|
|
1,037,866 |
|
Multi-asset |
|
663,295 |
|
|
|
84,749 |
|
|
|
44,708 |
|
|
|
4,853 |
|
|
|
797,605 |
|
|
|
710,224 |
|
Alternatives |
|
200,348 |
|
|
|
5,676 |
|
|
|
1,192 |
|
|
|
1,368 |
|
|
|
208,584 |
|
|
|
202,715 |
|
Active subtotal |
|
2,210,648 |
|
|
|
198,154 |
|
|
|
92,249 |
|
|
|
15,345 |
|
|
|
2,516,396 |
|
|
|
2,352,811 |
|
Index and ETFs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
ETFs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
2,010,343 |
|
|
|
40,042 |
|
|
|
255,483 |
|
|
|
3,186 |
|
|
|
2,309,054 |
|
|
|
2,123,824 |
|
Fixed income |
|
695,888 |
|
|
|
152,257 |
|
|
|
(13,756 |
) |
|
|
3,370 |
|
|
|
837,759 |
|
|
|
764,009 |
|
Multi-asset |
|
7,868 |
|
|
|
(549 |
) |
|
|
614 |
|
|
|
(41 |
) |
|
|
7,892 |
|
|
|
7,851 |
|
Alternatives |
|
70,197 |
|
|
|
(10,028 |
) |
|
|
1,021 |
|
|
|
37 |
|
|
|
61,227 |
|
|
|
62,166 |
|
ETFs subtotal |
|
2,784,296 |
|
|
|
181,722 |
|
|
|
243,362 |
|
|
|
6,552 |
|
|
|
3,215,932 |
|
|
|
2,957,850 |
|
Non-ETF Index: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity |
|
1,941,729 |
|
|
|
(33,045 |
) |
|
|
326,933 |
|
|
|
(1,990 |
) |
|
|
2,233,627 |
|
|
|
2,039,404 |
|
Fixed income |
|
789,999 |
|
|
|
26,174 |
|
|
|
(76,053 |
) |
|
|
(572 |
) |
|
|
739,548 |
|
|
|
740,579 |
|
Multi-asset |
|
7,302 |
|
|
|
(990 |
) |
|
|
215 |
|
|
|
(97 |
) |
|
|
6,430 |
|
|
|
6,688 |
|
Alternatives |
|
5,212 |
|
|
|
(1,733 |
) |
|
|
(307 |
) |
|
|
(34 |
) |
|
|
3,138 |
|
|
|
3,586 |
|
Non-ETF Index subtotal |
|
2,744,242 |
|
|
|
(9,594 |
) |
|
|
250,788 |
|
|
|
(2,693 |
) |
|
|
2,982,743 |
|
|
|
2,790,257 |
|
Index & ETFs subtotal |
|
5,528,538 |
|
|
|
172,128 |
|
|
|
494,150 |
|
|
|
3,859 |
|
|
|
6,198,675 |
|
|
|
5,748,107 |
|
Long-term |
|
7,739,186 |
|
|
|
370,282 |
|
|
|
586,399 |
|
|
|
19,204 |
|
|
|
8,715,071 |
|
|
|
8,100,918 |
|
Cash management |
|
739,457 |
|
|
|
(40,407 |
) |
|
|
5,532 |
|
|
|
5,559 |
|
|
|
710,141 |
|
|
|
690,482 |
|
Advisory |
|
8,767 |
|
|
|
(8,764 |
) |
|
|
(3 |
) |
|
|
— |
|
|
|
— |
|
|
|
676 |
|
Total |
$ |
8,487,410 |
|
|
$ |
321,111 |
|
|
$ |
591,928 |
|
|
$ |
24,763 |
|
|
$ |
9,425,212 |
|
|
$ |
8,792,076 |
|
The following table presents the component changes in AUM by product type for the twelve months ended June 30, 2023.
|
June 30, |
|
|
Net |
|
|
Market |
|
|
FX |
|
|
June 30, |
|
|
Average |
|
||||||
(in millions) |
2022 |
|
|
(outflows) |
|
|
change |
|
|
impact(1) |
|
|
2023 |
|
|
AUM(2) |
|
||||||
Equity |
$ |
4,345,120 |
|
|
$ |
(10,671 |
) |
|
$ |
622,529 |
|
|
$ |
4,366 |
|
|
$ |
4,961,344 |
|
|
$ |
4,565,234 |
|
Fixed income |
|
2,439,844 |
|
|
|
303,828 |
|
|
|
(83,573 |
) |
|
|
8,752 |
|
|
|
2,668,851 |
|
|
|
2,542,454 |
|
Multi-asset |
|
678,465 |
|
|
|
83,210 |
|
|
|
45,537 |
|
|
|
4,715 |
|
|
|
811,927 |
|
|
|
724,763 |
|
Alternatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Illiquid alternatives |
|
112,039 |
|
|
|
14,246 |
|
|
|
70 |
|
|
|
1,323 |
|
|
|
127,678 |
|
|
|
118,397 |
|
Liquid alternatives |
|
83,770 |
|
|
|
(7,275 |
) |
|
|
1,445 |
|
|
|
116 |
|
|
|
78,056 |
|
|
|
80,744 |
|
Currency and commodities(3) |
|
79,948 |
|
|
|
(13,056 |
) |
|
|
391 |
|
|
|
(68 |
) |
|
|
67,215 |
|
|
|
69,326 |
|
Alternatives subtotal |
|
275,757 |
|
|
|
(6,085 |
) |
|
|
1,906 |
|
|
|
1,371 |
|
|
|
272,949 |
|
|
|
268,467 |
|
Long-term |
|
7,739,186 |
|
|
|
370,282 |
|
|
|
586,399 |
|
|
|
19,204 |
|
|
|
8,715,071 |
|
|
|
8,100,918 |
|
Cash management |
|
739,457 |
|
|
|
(40,407 |
) |
|
|
5,532 |
|
|
|
5,559 |
|
|
|
710,141 |
|
|
|
690,482 |
|
Advisory |
|
8,767 |
|
|
|
(8,764 |
) |
|
|
(3 |
) |
|
|
— |
|
|
|
— |
|
|
|
676 |
|
Total |
$ |
8,487,410 |
|
|
$ |
321,111 |
|
|
$ |
591,928 |
|
|
$ |
24,763 |
|
|
$ |
9,425,212 |
|
|
$ |
8,792,076 |
|
52
AUM increased $938 billion to $9.4 trillion at June 30, 2023 from $8.5 trillion at June 30, 2022, driven by net market appreciation, net inflows, and the positive impact of foreign exchange movements.
Long-term net inflows of $370 billion were comprised of net inflows of $204 billion and $182 billion from institutional clients and ETFs, respectively, partially offset by retail net outflows of $16 billion. Net flows in long-term products are described below.
Cash management AUM decreased to $710 billion due to net outflows in the second half of 2022.
Net market appreciation of $592 billion was driven by global equity market appreciation.
AUM increased $25 billion due to the impact of foreign exchange movements, primarily due to the weakening of the US dollar largely against the British pound and euro, partially offset by the strengthening of the US dollar against the Japanese yen.
53
DISCUSSION OF FINANCIAL RESULTS
The Company’s results of operations for the three and six months ended June 30, 2023 and 2022 are discussed below. For a further description of the Company’s revenue and expense, see the Company's Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission on February 24, 2023 ("2022 Form 10-K.")
Revenue
The table below presents detail of revenue for the three and six months ended June 30, 2023 and 2022 and includes the product type mix of base fees and securities lending revenue and performance fees.
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Investment advisory, administration fees and |
|
|
|
|
|
|
|
|
|
|
|
||||
Equity: |
|
|
|
|
|
|
|
|
|
|
|
||||
Active |
$ |
506 |
|
|
$ |
550 |
|
|
$ |
1,006 |
|
|
$ |
1,166 |
|
ETFs |
|
1,102 |
|
|
|
1,103 |
|
|
|
2,180 |
|
|
|
2,261 |
|
Non-ETF index |
|
197 |
|
|
|
186 |
|
|
|
374 |
|
|
|
373 |
|
Equity subtotal |
|
1,805 |
|
|
|
1,839 |
|
|
|
3,560 |
|
|
|
3,800 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
||||
Active |
|
482 |
|
|
|
503 |
|
|
|
950 |
|
|
|
1,037 |
|
ETFs |
|
309 |
|
|
|
274 |
|
|
|
604 |
|
|
|
563 |
|
Non-ETF index |
|
88 |
|
|
|
102 |
|
|
|
175 |
|
|
|
220 |
|
Fixed income subtotal |
|
879 |
|
|
|
879 |
|
|
|
1,729 |
|
|
|
1,820 |
|
Multi-asset |
|
300 |
|
|
|
331 |
|
|
|
596 |
|
|
|
690 |
|
Alternatives: |
|
|
|
|
|
|
|
|
|
|
|
||||
Illiquid alternatives |
|
206 |
|
|
|
184 |
|
|
|
407 |
|
|
|
363 |
|
Liquid alternatives |
|
146 |
|
|
|
161 |
|
|
|
291 |
|
|
|
328 |
|
Currency and commodities(1) |
|
49 |
|
|
|
62 |
|
|
|
95 |
|
|
|
118 |
|
Alternatives subtotal |
|
401 |
|
|
|
407 |
|
|
|
793 |
|
|
|
809 |
|
Long-term |
|
3,385 |
|
|
|
3,456 |
|
|
|
6,678 |
|
|
|
7,119 |
|
Cash management |
|
226 |
|
|
|
232 |
|
|
|
435 |
|
|
|
402 |
|
Total investment advisory, administration fees |
|
3,611 |
|
|
|
3,688 |
|
|
|
7,113 |
|
|
|
7,521 |
|
Investment advisory performance fees: |
|
|
|
|
|
|
|
|
|
|
|
||||
Equity |
|
15 |
|
|
|
3 |
|
|
|
21 |
|
|
|
15 |
|
Fixed income |
|
— |
|
|
|
13 |
|
|
|
1 |
|
|
|
22 |
|
Multi-asset |
|
3 |
|
|
|
7 |
|
|
|
18 |
|
|
|
12 |
|
Alternatives: |
|
|
|
|
|
|
|
|
|
|
|
||||
Illiquid alternatives |
|
79 |
|
|
|
65 |
|
|
|
100 |
|
|
|
102 |
|
Liquid alternatives |
|
21 |
|
|
|
18 |
|
|
|
33 |
|
|
|
53 |
|
Alternatives subtotal |
|
100 |
|
|
|
83 |
|
|
|
133 |
|
|
|
155 |
|
Total investment advisory performance fees |
|
118 |
|
|
|
106 |
|
|
|
173 |
|
|
|
204 |
|
Technology services revenue |
|
359 |
|
|
|
332 |
|
|
|
699 |
|
|
|
673 |
|
Distribution fees |
|
319 |
|
|
|
361 |
|
|
|
638 |
|
|
|
742 |
|
Advisory and other revenue: |
|
|
|
|
|
|
|
|
|
|
|
||||
Advisory |
|
31 |
|
|
|
15 |
|
|
|
45 |
|
|
|
31 |
|
Other |
|
25 |
|
|
|
24 |
|
|
|
38 |
|
|
|
54 |
|
Total advisory and other revenue |
|
56 |
|
|
|
39 |
|
|
|
83 |
|
|
|
85 |
|
Total revenue |
$ |
4,463 |
|
|
$ |
4,526 |
|
|
$ |
8,706 |
|
|
$ |
9,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
54
The table below lists a percentage breakdown of base fees and securities lending revenue and average AUM by product type:
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||||||||||||
|
Percentage of Base |
|
|
|
Percentage of |
|
|
Percentage of Base |
|
|
|
Percentage of |
|
||||||||||||||||||||
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
||||||||
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Active |
|
14 |
% |
|
|
15 |
% |
|
|
|
4 |
% |
|
|
5 |
% |
|
|
14 |
% |
|
|
15 |
% |
|
|
|
5 |
% |
|
|
5 |
% |
ETFs |
|
32 |
% |
|
|
30 |
% |
|
|
|
25 |
% |
|
|
24 |
% |
|
|
31 |
% |
|
|
30 |
% |
|
|
|
25 |
% |
|
|
23 |
% |
Non-ETF index |
|
5 |
% |
|
|
5 |
% |
|
|
|
23 |
% |
|
|
24 |
% |
|
|
5 |
% |
|
|
5 |
% |
|
|
|
23 |
% |
|
|
24 |
% |
Equity subtotal |
|
51 |
% |
|
|
50 |
% |
|
|
|
52 |
% |
|
|
53 |
% |
|
|
50 |
% |
|
|
50 |
% |
|
|
|
53 |
% |
|
|
52 |
% |
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Active |
|
13 |
% |
|
|
14 |
% |
|
|
|
12 |
% |
|
|
11 |
% |
|
|
14 |
% |
|
|
14 |
% |
|
|
|
12 |
% |
|
|
11 |
% |
ETFs |
|
9 |
% |
|
|
7 |
% |
|
|
|
9 |
% |
|
|
8 |
% |
|
|
8 |
% |
|
|
7 |
% |
|
|
|
9 |
% |
|
|
8 |
% |
Non-ETF index |
|
2 |
% |
|
|
3 |
% |
|
|
|
8 |
% |
|
|
9 |
% |
|
|
2 |
% |
|
|
3 |
% |
|
|
|
8 |
% |
|
|
10 |
% |
Fixed income subtotal |
|
24 |
% |
|
|
24 |
% |
|
|
|
29 |
% |
|
|
28 |
% |
|
|
24 |
% |
|
|
24 |
% |
|
|
|
29 |
% |
|
|
29 |
% |
Multi-asset |
|
8 |
% |
|
|
9 |
% |
|
|
|
9 |
% |
|
|
8 |
% |
|
|
8 |
% |
|
|
9 |
% |
|
|
|
8 |
% |
|
|
8 |
% |
Alternatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Illiquid alternatives |
|
6 |
% |
|
|
5 |
% |
|
|
|
1 |
% |
|
|
1 |
% |
|
|
6 |
% |
|
|
5 |
% |
|
|
|
1 |
% |
|
|
1 |
% |
Liquid alternatives |
|
4 |
% |
|
|
4 |
% |
|
|
|
1 |
% |
|
|
1 |
% |
|
|
4 |
% |
|
|
4 |
% |
|
|
|
1 |
% |
|
|
1 |
% |
Currency and |
|
1 |
% |
|
|
2 |
% |
|
|
|
1 |
% |
|
|
1 |
% |
|
|
2 |
% |
|
|
3 |
% |
|
|
|
1 |
% |
|
|
1 |
% |
Alternatives subtotal |
|
11 |
% |
|
|
11 |
% |
|
|
|
3 |
% |
|
|
3 |
% |
|
|
12 |
% |
|
|
12 |
% |
|
|
|
3 |
% |
|
|
3 |
% |
Long-term |
|
94 |
% |
|
|
94 |
% |
|
|
|
93 |
% |
|
|
92 |
% |
|
|
94 |
% |
|
|
95 |
% |
|
|
|
93 |
% |
|
|
92 |
% |
Cash management |
|
6 |
% |
|
|
6 |
% |
|
|
|
7 |
% |
|
|
8 |
% |
|
|
6 |
% |
|
|
5 |
% |
|
|
|
7 |
% |
|
|
8 |
% |
Total AUM |
|
100 |
% |
|
|
100 |
% |
|
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
100 |
% |
|
|
100 |
% |
Three Months Ended June 30, 2023 Compared with Three Months Ended June 30, 2022
Revenue decreased $63 million, or 1%, from the three months ended June 30, 2022, primarily driven by lower base fees due to the impact of lower markets on average AUM.
Investment advisory, administration fees and securities lending revenue of $3.6 billion decreased $77 million from $3.7 billion for the three months ended June 30, 2022, primarily driven by the negative impact of market beta on average AUM over the last twelve months, partially offset by higher securities lending revenue. Securities lending revenue of $184 million increased from $160 million for the three months ended June 30, 2022, primarily reflecting higher spreads.
Investment advisory performance fees of $118 million increased $12 million from $106 million for the three months ended June 30, 2022, primarily reflecting higher revenue from illiquid alternative products.
Technology services revenue of $359 million increased $27 million from $332 million for the three months ended June 30, 2022, reflecting continued strong client demand for Aladdin but also the impact of fixed income market movements over the last twelve months on positions on the Aladdin platform.
Total advisory and other revenue of $56 million increased $17 million from $39 million for the three months ended June 30, 2022, primarily reflecting higher revenue from advisory assignments.
55
Six Months Ended June 30, 2023 Compared with Six Months Ended June 30, 2022
Revenue decreased $519 million, or 6%, from the six months ended June 30, 2022, primarily driven by the impact of lower markets on average AUM.
Investment advisory, administration fees and securities lending revenue of $7.1 billion decreased $408 million from $7.5 billion for the six months ended June 30, 2022, primarily driven by the negative impact of market beta on average AUM, partially offset by the elimination of yield-related fee waivers on money market funds and higher securities lending revenue. Securities lending revenue of $351 million increased from $298 million for the six months ended June 30, 2022, primarily reflecting higher spreads.
Investment advisory performance fees of $173 million decreased $31 million from $204 million for the six months ended June 30, 2022, primarily reflecting lower revenue from long-only fixed income products and liquid alternative products.
Technology services revenue of $699 million increased $26 million from $673 million for the six months ended June 30, 2022, reflecting continued strong client demand for Aladdin but also the impact of fixed income market movements over the last twelve months on positions on the Aladdin platform.
Expense
The following table presents expense for the three and six months ended June 30, 2023 and 2022.
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Employee compensation and benefits |
$ |
1,429 |
|
|
$ |
1,414 |
|
|
$ |
2,856 |
|
|
$ |
2,912 |
|
Distribution and servicing costs |
|
518 |
|
|
|
572 |
|
|
|
1,023 |
|
|
|
1,146 |
|
Direct fund expense |
|
344 |
|
|
|
304 |
|
|
|
659 |
|
|
|
633 |
|
General and administration expense: |
|
|
|
|
|
|
|
|
|
|
|
||||
Marketing and promotional |
|
82 |
|
|
|
76 |
|
|
|
162 |
|
|
|
136 |
|
Occupancy and office related |
|
100 |
|
|
|
106 |
|
|
|
210 |
|
|
|
205 |
|
Portfolio services |
|
69 |
|
|
|
67 |
|
|
|
137 |
|
|
|
136 |
|
Sub-advisory |
|
19 |
|
|
|
20 |
|
|
|
39 |
|
|
|
42 |
|
Technology |
|
141 |
|
|
|
148 |
|
|
|
276 |
|
|
|
293 |
|
Professional services |
|
35 |
|
|
|
42 |
|
|
|
77 |
|
|
|
82 |
|
Communications |
|
12 |
|
|
|
10 |
|
|
|
24 |
|
|
|
21 |
|
Foreign exchange remeasurement |
|
2 |
|
|
|
2 |
|
|
|
1 |
|
|
|
(1 |
) |
Contingent consideration fair value adjustments |
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
Other general and administration |
|
59 |
|
|
|
59 |
|
|
|
114 |
|
|
|
111 |
|
Total general and administration expense |
|
520 |
|
|
|
530 |
|
|
|
1,041 |
|
|
|
1,026 |
|
Amortization of intangible assets |
|
37 |
|
|
|
38 |
|
|
|
74 |
|
|
|
76 |
|
Total expense |
$ |
2,848 |
|
|
$ |
2,858 |
|
|
$ |
5,653 |
|
|
$ |
5,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
56
Three Months Ended June 30, 2023 Compared with Three Months Ended June 30, 2022
Expense decreased $10 million from the three months ended June 30, 2022, reflecting lower distribution and servicing costs due to lower average AUM, partially offset by higher direct fund expense and employee compensation and benefits expense.
Employee compensation and benefits expense increased $15 million from the three months ended June 30, 2022, reflecting higher base compensation, driven primarily by base salary increases, partially offset by lower incentive compensation, primarily as a result of lower operating income.
Direct fund expense increased $40 million from the three months ended June 30, 2022, primarily reflecting higher average index AUM and lower rebates.
Six Months Ended June 30, 2023 Compared with Six Months Ended June 30, 2022
Expense decreased $140 million, or 2%, from the six months ended June 30, 2022, reflecting lower employee compensation and benefits expense and lower volume related expense.
Employee compensation and benefits expense decreased $56 million from the six months ended June 30, 2022, primarily resulting from lower incentive compensation, largely driven by lower operating income, partially offset by higher base compensation, driven primarily by base salary increases.
Direct fund expense increased $26 million from the six months ended June 30, 2022, primarily reflecting higher average index AUM.
General and administration expense increased $15 million from the six months ended June 30, 2022, primarily driven by higher marketing and promotional expense, resulting from higher travel and entertainment expense, partially offset by lower technology expense, related to the impact of certain credits.
57
Nonoperating Results
The summary of nonoperating income (expense), less net income (loss) attributable to NCI for the three and six months ended June 30, 2023 and 2022 was as follows:
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Nonoperating income (expense), GAAP basis |
$ |
251 |
|
|
$ |
(347 |
) |
|
$ |
367 |
|
|
$ |
(485 |
) |
Less: Net income (loss) attributable to NCI |
|
57 |
|
|
|
(114 |
) |
|
|
69 |
|
|
|
(187 |
) |
Nonoperating income (expense), net of NCI |
|
194 |
|
|
|
(233 |
) |
|
|
298 |
|
|
|
(298 |
) |
Less: Hedge gain (loss) on deferred cash compensation |
|
16 |
|
|
|
— |
|
|
|
33 |
|
|
|
— |
|
Nonoperating income (expense), net of NCI, as adjusted(2) |
$ |
178 |
|
|
$ |
(233 |
) |
|
$ |
265 |
|
|
$ |
(298 |
) |
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
||||||||||
(in millions) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net gain (loss) on investments, net of NCI |
|
|
|
|
|
|
|
|
|
|
|
||||
Private equity |
$ |
151 |
|
|
$ |
(8 |
) |
|
$ |
190 |
|
|
$ |
2 |
|
Real assets |
|
2 |
|
|
|
1 |
|
|
|
8 |
|
|
|
14 |
|
Other alternatives(3) |
|
4 |
|
|
|
(5 |
) |
|
|
10 |
|
|
|
(1 |
) |
Other investments(4) |
|
(7 |
) |
|
|
(112 |
) |
|
|
5 |
|
|
|
(187 |
) |
Hedge gain (loss) on deferred cash compensation |
|
16 |
|
|
|
— |
|
|
|
33 |
|
|
|
— |
|
Subtotal |
|
166 |
|
|
|
(124 |
) |
|
|
246 |
|
|
|
(172 |
) |
Other gains (losses)(5) |
|
8 |
|
|
|
(76 |
) |
|
|
5 |
|
|
|
(57 |
) |
Total net gain (loss) on investments, net of NCI |
|
174 |
|
|
|
(200 |
) |
|
|
251 |
|
|
|
(229 |
) |
Interest and dividend income |
|
89 |
|
|
|
21 |
|
|
|
175 |
|
|
|
39 |
|
Interest expense |
|
(69 |
) |
|
|
(54 |
) |
|
|
(128 |
) |
|
|
(108 |
) |
Net interest income (expense) |
|
20 |
|
|
|
(33 |
) |
|
|
47 |
|
|
|
(69 |
) |
Nonoperating income (expense), net of NCI |
|
194 |
|
|
|
(233 |
) |
|
|
298 |
|
|
|
(298 |
) |
Less: Hedge gain (loss) on deferred cash compensation |
|
16 |
|
|
|
— |
|
|
|
33 |
|
|
|
— |
|
Nonoperating income (expense), net of NCI, as adjusted(2) |
$ |
178 |
|
|
$ |
(233 |
) |
|
$ |
265 |
|
|
$ |
(298 |
) |
58
Income Tax Expense
|
GAAP |
|
|
As Adjusted |
|
||||||||||||||||||||||||||
|
Three Months Ended |
|
|
Six Months Ended |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||||
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
||||||||||||||||||||
(in millions) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||||||
Operating income(1) |
$ |
1,615 |
|
|
$ |
1,668 |
|
|
$ |
3,053 |
|
|
$ |
3,432 |
|
|
$ |
1,675 |
|
|
$ |
1,727 |
|
|
$ |
3,186 |
|
|
$ |
3,549 |
|
Total nonoperating income |
$ |
194 |
|
|
$ |
(233 |
) |
|
$ |
298 |
|
|
$ |
(298 |
) |
|
$ |
178 |
|
|
$ |
(233 |
) |
|
$ |
265 |
|
|
$ |
(298 |
) |
Income before income |
$ |
1,809 |
|
|
$ |
1,435 |
|
|
$ |
3,351 |
|
|
$ |
3,134 |
|
|
$ |
1,853 |
|
|
$ |
1,494 |
|
|
$ |
3,451 |
|
|
$ |
3,251 |
|
Income tax expense |
$ |
443 |
|
|
$ |
358 |
|
|
$ |
828 |
|
|
$ |
621 |
|
|
$ |
454 |
|
|
$ |
372 |
|
|
$ |
852 |
|
|
$ |
667 |
|
Effective tax rate |
|
24.5 |
% |
|
|
24.9 |
% |
|
|
24.7 |
% |
|
|
19.8 |
% |
|
|
24.5 |
% |
|
|
24.9 |
% |
|
|
24.7 |
% |
|
|
20.5 |
% |
2023. Income tax expense for the six months ended June 30, 2023 included $40 million of discrete tax benefits primarily related to stock-based compensation awards that vested in the first quarter of 2023, offset by a $38 million discrete tax expense related to the resolution of certain outstanding tax matters.
On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was enacted into law, which became effective January 1, 2023 and introduced new provisions including a corporate book minimum tax and an excise tax on net stock repurchases. The provisions within the IRA did not have a material impact on BlackRock's condensed consolidated financial statements.
2022. Income tax expense for the six months ended June 30, 2022 included $133 million of discrete tax benefits related to stock-based compensation awards that vested in the first quarter and the resolution of certain outstanding tax matters. In addition, GAAP income tax expense for the six months ended June 30, 2022 included $18 million of net noncash tax benefit related to the revaluation of certain deferred income tax liabilities, which was excluded from our as adjusted results, as it will not have a cash flow impact and to ensure comparability among periods presented.
59
STATEMENT OF FINANCIAL CONDITION OVERVIEW
As Adjusted Statement of Financial Condition
The following table presents a reconciliation of the condensed consolidated statement of financial condition presented on a GAAP basis to the condensed consolidated statement of financial condition, excluding the impact of separate account assets and separate account collateral held under securities lending agreements (directly related to lending separate account securities) and separate account liabilities and separate account collateral liabilities under securities lending agreements and consolidated sponsored investment products ("CIPs").
The Company presents the as adjusted statement of financial condition as additional information to enable investors to exclude certain assets that have equal and offsetting liabilities or NCI that ultimately do not have an impact on stockholders’ equity or cash flows. Management views the as adjusted statement of financial condition, which contains non-GAAP financial measures, as an economic presentation of the Company’s total assets and liabilities; however, it does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
Separate Account Assets and Liabilities and Separate Account Collateral Held under Securities Lending Agreements
Separate account assets are maintained by BlackRock Life Limited, a wholly owned subsidiary of the Company that is a registered life insurance company in the United Kingdom ("UK"), and represent segregated assets held for purposes of funding individual and group pension contracts. The Company records equal and offsetting separate account liabilities. The separate account assets are not available to creditors of the Company and the holders of the pension contracts have no recourse to the Company’s assets. The net investment income attributable to separate account assets accrues directly to the contract owners and is not reported on the condensed consolidated statements of income. While BlackRock has no economic interest in these assets or liabilities, BlackRock earns an investment advisory fee for the service of managing these assets on behalf of its clients.
In addition, the Company records on its condensed consolidated statements of financial condition the separate account collateral obtained under BlackRock Life Limited securities lending arrangements for which it has legal title as its own asset in addition to an equal and offsetting separate account collateral liability for the obligation to return the collateral. The collateral is not available to creditors of the Company, and the borrowers under the securities lending arrangements have no recourse to the Company’s assets.
Consolidated Sponsored Investment Products
The Company consolidates certain sponsored investment products accounted for as variable interest entities (“VIEs”) and voting rights entities (“VREs”). See Note 2, Significant Accounting Policies, in the notes to the consolidated financial statements contained in the 2022 Form 10-K for more information on the Company’s consolidation policy.
60
The Company cannot readily access cash and cash equivalents or other assets held by CIPs to use in its operating activities. In addition, the Company cannot readily sell investments held by CIPs in order to obtain cash for use in the Company’s operations.
|
|
June 30, 2023 |
|
|||||||||||||
(in millions) |
|
GAAP |
|
|
Separate |
|
|
CIPs(2) |
|
|
As |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
6,834 |
|
|
$ |
— |
|
|
$ |
256 |
|
|
$ |
6,578 |
|
Accounts receivable |
|
|
3,806 |
|
|
|
— |
|
|
|
— |
|
|
|
3,806 |
|
Investments |
|
|
9,124 |
|
|
|
— |
|
|
|
1,698 |
|
|
|
7,426 |
|
Separate account assets and collateral held |
|
|
60,930 |
|
|
|
60,930 |
|
|
|
— |
|
|
|
— |
|
Operating lease right-of-use assets |
|
|
1,464 |
|
|
|
— |
|
|
|
— |
|
|
|
1,464 |
|
Other assets(3) |
|
|
6,920 |
|
|
|
— |
|
|
|
104 |
|
|
|
6,816 |
|
Subtotal |
|
|
89,078 |
|
|
|
60,930 |
|
|
|
2,058 |
|
|
|
26,090 |
|
Goodwill and intangible assets, net |
|
|
33,566 |
|
|
|
— |
|
|
|
— |
|
|
|
33,566 |
|
Total assets |
|
$ |
122,644 |
|
|
$ |
60,930 |
|
|
$ |
2,058 |
|
|
$ |
59,656 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accrued compensation and benefits |
|
$ |
1,374 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,374 |
|
Accounts payable and accrued liabilities |
|
|
1,156 |
|
|
|
— |
|
|
|
— |
|
|
|
1,156 |
|
Borrowings |
|
|
7,904 |
|
|
|
— |
|
|
|
— |
|
|
|
7,904 |
|
Separate account liabilities and collateral |
|
|
60,930 |
|
|
|
60,930 |
|
|
|
— |
|
|
|
— |
|
Deferred income tax liabilities(4) |
|
|
3,439 |
|
|
|
— |
|
|
|
— |
|
|
|
3,439 |
|
Operating lease liabilities |
|
|
1,814 |
|
|
|
— |
|
|
|
— |
|
|
|
1,814 |
|
Other liabilities |
|
|
6,131 |
|
|
|
— |
|
|
|
422 |
|
|
|
5,709 |
|
Total liabilities |
|
|
82,748 |
|
|
|
60,930 |
|
|
|
422 |
|
|
|
21,396 |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total BlackRock, Inc. stockholders’ equity |
|
|
38,208 |
|
|
|
— |
|
|
|
— |
|
|
|
38,208 |
|
Noncontrolling interests |
|
|
1,688 |
|
|
|
— |
|
|
|
1,636 |
|
|
|
52 |
|
Total equity |
|
|
39,896 |
|
|
|
— |
|
|
|
1,636 |
|
|
|
38,260 |
|
Total liabilities and equity |
|
$ |
122,644 |
|
|
$ |
60,930 |
|
|
$ |
2,058 |
|
|
$ |
59,656 |
|
The following discussion summarizes the significant changes in assets and liabilities on a GAAP basis. Please see the condensed consolidated statements of financial condition as of June 30, 2023 and December 31, 2022 contained in Part I, Item 1 of this filing. The discussion does not include changes related to assets and liabilities that are equal and offsetting and have no impact on BlackRock’s stockholders’ equity.
Assets. Cash and cash equivalents at June 30, 2023 included $256 million of cash held by CIPs (see Liquidity and Capital Resources for details on the change in cash and cash equivalents during the six months ended June 30, 2023). Accounts receivable at June 30, 2023 increased $542 million from December 31, 2022, primarily due to higher base fee and technology services receivables. Investments at June 30, 2023 increased $1.7 billion from December 31, 2022 (for more information see Investments herein). Goodwill and intangible assets at June 30, 2023 decreased $77 million from December 31, 2022, primarily due to amortization of intangible assets. Other assets at June 30, 2023 increased $2.4 billion from December 31, 2022, primarily related to an increase in unit trust receivables (substantially offset by an increase in unit trust payables recorded within other liabilities), partially offset by a decrease in due from related parties.
Liabilities. Accrued compensation and benefits at June 30, 2023 decreased $898 million from December 31, 2022, primarily due to 2022 incentive compensation cash payments in the first quarter of 2023, partially offset by 2023 incentive compensation accruals. Other liabilities at June 30, 2023 increased $2.6 billion from December 31, 2022, primarily due to higher unit trust payables (substantially offset by an increase in unit trust receivables recorded within other assets) and an increase in the deferred carried interest liability. Net deferred income tax liabilities at June 30, 2023 increased $58 million from December 31, 2022, primarily due to the effects of temporary differences associated with stock-based compensation.
61
Investments
The Company’s investments were $9.1 billion and $7.5 billion at June 30, 2023 and December 31, 2022, respectively. Investments include CIPs accounted for as VIEs and VREs. Management reviews BlackRock’s investments on an “economic” basis, which eliminates the portion of investments that does not impact BlackRock’s book value or net income attributable to BlackRock. BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
The Company presents investments, as adjusted, to enable investors to understand the portion of investments that is owned by the Company, net of NCI, as a gauge to measure the impact of changes in net nonoperating income (expense) on investments to net income (loss) attributable to BlackRock.
The Company further presents net “economic” investment exposure, net of deferred cash compensation investments and hedged exposures, to reflect another helpful measure for investors. The economic impact of investments held pursuant to deferred cash compensation plans is substantially offset by a change in associated compensation expense, and the impact of the portfolio of seed investments is mitigated by futures entered into as part of the Company's macro hedging strategy. Carried interest capital allocations are excluded as there is no impact to BlackRock’s stockholders’ equity until such amounts are realized as performance fees. Finally, the Company’s regulatory investment in Federal Reserve Bank stock, which is not subject to market or interest rate risk, is excluded from the Company’s net economic investment exposure.
|
|
June 30, |
|
|
December 31, |
|
||
(in millions) |
|
2023 |
|
|
2022 |
|
||
Investments, GAAP |
|
$ |
9,124 |
|
|
$ |
7,466 |
|
Investments held by CIPs |
|
|
(5,805 |
) |
|
|
(4,669 |
) |
Net interest in CIPs(1) |
|
|
4,107 |
|
|
|
3,622 |
|
Investments, as adjusted |
|
|
7,426 |
|
|
|
6,419 |
|
Deferred cash compensation investments |
|
|
(275 |
) |
|
|
— |
|
Hedged exposures |
|
|
(1,567 |
) |
|
|
(1,461 |
) |
Federal Reserve Bank stock |
|
|
(91 |
) |
|
|
(91 |
) |
Carried interest |
|
|
(1,699 |
) |
|
|
(1,550 |
) |
Total “economic” investment exposure(2) |
|
$ |
3,794 |
|
|
$ |
3,317 |
|
62
The following table represents the carrying value of the Company’s economic investment exposure, by asset type, at June 30, 2023 and December 31, 2022:
|
|
June 30, |
|
|
December 31, |
|
||
(in millions) |
|
2023 |
|
|
2022 |
|
||
Equity/Fixed income/Multi-asset(1) |
|
$ |
2,737 |
|
|
$ |
2,423 |
|
Alternatives: |
|
|
|
|
|
|
||
Private equity |
|
|
1,448 |
|
|
|
1,207 |
|
Real assets |
|
|
448 |
|
|
|
368 |
|
Other alternatives(2) |
|
|
728 |
|
|
|
780 |
|
Alternatives subtotal |
|
|
2,624 |
|
|
|
2,355 |
|
Hedged exposures |
|
|
(1,567 |
) |
|
|
(1,461 |
) |
Total “economic” investment exposure |
|
$ |
3,794 |
|
|
$ |
3,317 |
|
As adjusted investment activity for the six months ended June 30, 2023 was as follows:
(in millions) |
Six Months |
|
|
Investments, as adjusted, beginning balance |
$ |
6,419 |
|
Purchases/capital contributions |
|
816 |
|
Sales/maturities |
|
(257 |
) |
Distributions(1) |
|
(41 |
) |
Market appreciation(depreciation)/earnings from equity method investments |
|
309 |
|
Carried interest capital allocations/(distributions) |
|
149 |
|
Other(2) |
|
31 |
|
Investments, as adjusted, ending balance |
$ |
7,426 |
|
63
LIQUIDITY AND CAPITAL RESOURCES
BlackRock Cash Flows Excluding the Impact of CIPs
The condensed consolidated statements of cash flows include the cash flows of the CIPs. The Company uses an adjusted cash flow statement, which excludes the impact of CIPs, as a supplemental non-GAAP measure to assess liquidity and capital requirements. The Company believes that its cash flows, excluding the impact of the CIPs, provide investors with useful information on the cash flows of BlackRock relating to its ability to fund additional operating, investing and financing activities. BlackRock’s management does not advocate that investors consider such non-GAAP measures in isolation from, or as a substitute for, its cash flows presented in accordance with GAAP.
The following table presents a reconciliation of the condensed consolidated statements of cash flows presented on a GAAP basis to the condensed consolidated statements of cash flows, excluding the impact of the cash flows of CIPs:
(in millions) |
GAAP |
|
|
Impact on |
|
|
Cash Flows |
|
|||
Cash, cash equivalents and restricted cash, December 31, 2022 |
$ |
7,433 |
|
|
$ |
265 |
|
|
$ |
7,168 |
|
Net cash provided by/(used in) operating activities |
|
591 |
|
|
|
(653 |
) |
|
|
1,244 |
|
Net cash provided by/(used in) investing activities |
|
(503 |
) |
|
|
27 |
|
|
|
(530 |
) |
Net cash provided by/(used in) financing activities |
|
(754 |
) |
|
|
617 |
|
|
|
(1,371 |
) |
Effect of exchange rate changes on cash, cash equivalents |
|
84 |
|
|
|
— |
|
|
|
84 |
|
Net increase/(decrease) in cash, cash equivalents and restricted cash |
|
(582 |
) |
|
|
(9 |
) |
|
|
(573 |
) |
Cash, cash equivalents and restricted cash, June 30, 2023 |
$ |
6,851 |
|
|
$ |
256 |
|
|
$ |
6,595 |
|
Sources of BlackRock’s operating cash primarily include base fees and securities lending revenue, performance fees, technology services revenue, advisory and other revenue and distribution fees. BlackRock uses its cash to pay all operating expenses, interest and principal on borrowings, income taxes, dividends and repurchases of the Company’s stock, acquisitions, capital expenditures and purchases of co-investments and seed investments.
For details of the Company’s GAAP cash flows from operating, investing and financing activities, see the condensed consolidated statements of cash flows contained in Part I, Item 1 of this filing.
Cash flows provided by/(used in) operating activities, excluding the impact of CIPs, primarily include the receipt of base fees, securities lending revenue, performance fees and technology services revenue, offset by the payment of operating expenses incurred in the normal course of business, including year-end incentive and deferred cash compensation accrued during prior years, and income tax payments.
Cash flows used in investing activities, excluding the impact of CIPs, for the six months ended June 30, 2023 were $530 million and primarily reflected $405 million of net investment purchases and $142 million of purchases of property and equipment.
Cash flows used in financing activities, excluding the impact of CIPs, for the six months ended June 30, 2023 were $1.4 billion, primarily resulting from $1.5 billion of cash dividend payments, and $1.1 billion of share repurchases, including $0.8 billion in open market transactions and $0.3 billion of employee tax withholdings related to employee stock transactions, partially offset by $1.2 billion of proceeds from long-term borrowings.
64
The Company manages its financial condition and funding to maintain appropriate liquidity for the business. Management believes that the Company’s liquid assets, continuing cash flows from operations, borrowing capacity under the Company’s existing revolving credit facility and uncommitted commercial paper private placement program, provide sufficient resources to meet the Company’s short-term and long-term cash needs, including operating, debt and other obligations as they come due and anticipated future capital requirements. Liquidity resources at June 30, 2023 and December 31, 2022 were as follows:
|
June 30, |
|
|
December 31, |
|
||
(in millions) |
2023 |
|
|
2022 |
|
||
Cash and cash equivalents |
$ |
6,834 |
|
|
$ |
7,416 |
|
Cash and cash equivalents held by CIPs(1) |
|
(256 |
) |
|
|
(265 |
) |
Subtotal(2) |
|
6,578 |
|
|
|
7,151 |
|
Credit facility – undrawn |
|
5,000 |
|
|
|
4,700 |
|
Total liquidity resources |
$ |
11,578 |
|
|
$ |
11,851 |
|
Total liquidity resources decreased $273 million during the six months ended June 30, 2023, primarily reflecting cash payments of 2022 year-end incentive awards, cash dividend payments of $1.5 billion and share repurchases of $1.1 billion, partially offset by $1.2 billion of proceeds from long-term borrowings, cash flows from other operating activities and a $300 million increase in the aggregate commitment amount under the credit facility.
A significant portion of the Company’s $7.4 billion of investments, as adjusted, is illiquid in nature and, as such, cannot be readily convertible to cash.
Share Repurchases. In January 2023, the Company announced that the Board of Directors authorized the repurchase of an additional seven million shares under the Company's existing share repurchase program for a total of up to approximately 7.9 million shares of BlackRock common stock.
During the six months ended June 30, 2023, the Company repurchased 1.1 million common shares under the Company’s existing share repurchase program for approximately $750 million. At June 30, 2023, there were approximately 6.8 million shares still authorized to be repurchased under the program.
Net Capital Requirements. The Company is required to maintain net capital in certain regulated subsidiaries within a number of jurisdictions, which is partially maintained by retaining cash and cash equivalent investments in those subsidiaries or jurisdictions. As a result, such subsidiaries of the Company may be restricted in their ability to transfer cash between different jurisdictions and to their parents. Additionally, transfers of cash between international jurisdictions may have adverse tax consequences that could discourage such transfers.
BlackRock Institutional Trust Company, N.A. (“BTC”) is chartered as a national bank that does not accept deposits or make commercial loans and whose powers are limited to trust and other fiduciary activities. BTC provides investment management and other fiduciary services, including investment advisory and securities lending agency services, to institutional clients. BTC is subject to regulatory capital and liquid asset requirements administered by the US Office of the Comptroller of the Currency.
At June 30, 2023 and December 31, 2022, the Company was required to maintain approximately $2.3 billion and $2.2 billion, respectively, in net capital in certain regulated subsidiaries, including BTC, entities regulated by the Financial Conduct Authority and Prudential Regulation Authority in the UK, and the Company’s broker-dealers. The Company was in compliance with all applicable regulatory net capital requirements.
Short-Term Borrowings
2023 Revolving Credit Facility. The Company maintains an unsecured revolving credit facility which is available for working capital and general corporate purposes (the “2023 credit facility”). In March 2023, the 2023 credit facility was amended to, among other things, (1) increase the aggregate commitment amount by $300 million to $5 billion, (2) extend the maturity date to March 2028 and (3) change the secured overnight financing rate (“SOFR”) adjustment to 10 bps per annum for all SOFR-based borrowings. The 2023 credit facility permits the Company to request up to an additional $1.0 billion of borrowing capacity, subject to lender credit approval, which could increase the overall size of the 2023 credit facility to an aggregate principal amount of up to $6 billion. The 2023 credit facility requires the Company not to exceed a maximum leverage ratio (ratio of net debt to earnings before interest, taxes, depreciation and amortization, where net debt equals total debt less unrestricted cash) of 3 to 1, which was satisfied with a ratio of less than 1 to 1 at June 30, 2023. At June 30, 2023, the Company had no amount outstanding under the 2023 credit facility.
65
Commercial Paper Program. The Company can issue unsecured commercial paper notes (the “CP Notes”) on a private-placement basis up to a maximum aggregate amount outstanding at any time of $4 billion. The commercial paper program is currently supported by the 2023 credit facility. At June 30, 2023, BlackRock had no CP Notes outstanding.
Long-Term Borrowings
At June 30, 2023, the principal amount of long-term notes outstanding was $8.0 billion. See Note 15, Borrowings, in the 2022 Form 10-K for more information on overall borrowings outstanding as of December 31, 2022.
During the six months ended June 30, 2023, the Company paid approximately $89 million of interest on long-term notes. Future principal repayments and interest requirements at June 30, 2023 were as follows:
(in millions) |
|
|
|
|
|
|
|
|
|
|||
Year |
|
Principal |
|
|
Interest |
|
|
Total |
|
|||
Remainder of 2023 |
|
$ |
— |
|
|
$ |
109 |
|
|
$ |
109 |
|
2024 |
|
|
1,000 |
|
|
|
210 |
|
|
|
1,210 |
|
2025(1) |
|
|
764 |
|
|
|
193 |
|
|
|
957 |
|
2026 |
|
|
— |
|
|
|
183 |
|
|
|
183 |
|
2027 |
|
|
700 |
|
|
|
172 |
|
|
|
872 |
|
2028 |
|
|
— |
|
|
|
161 |
|
|
|
161 |
|
Thereafter |
|
|
5,500 |
|
|
|
452 |
|
|
|
5,952 |
|
Total |
|
$ |
7,964 |
|
|
$ |
1,480 |
|
|
$ |
9,444 |
|
In May 2023, the Company issued $1.25 billion in aggregate principal amount of 4.75% senior unsecured notes maturing on May 25, 2033 (the “2033 Notes”). The net proceeds of the 2033 Notes are being used for general corporate purposes, which may include the future repayment of all or a portion of the $1.0 billion 3.50% Notes maturing in March 2024. Interest of approximately $59 million per year is payable semi-annually on May 25 and November 25 of each year, commencing on November 25, 2023. The 2033 Notes may be redeemed at the option of the Company, in whole or in part, at any time prior to February 25, 2033 at a "make-whole" redemption price, or thereafter at 100% of the principal amount of the 2033 Notes, in each case plus accrued but unpaid interest. The unamortized discount and debt issuance costs are being amortized over the remaining term of the 2033 Notes.
Commitments and Contingencies
Investment Commitments. At June 30, 2023, the Company had $797 million of various capital commitments to fund sponsored investment products, including CIPs. These products include various illiquid alternative products, including private equity funds and real assets funds and opportunistic funds. This amount excludes additional commitments made by consolidated funds of funds to underlying third-party funds as third-party noncontrolling interest holders have the legal obligation to fund the respective commitments of such funds of funds. Generally, the timing of the funding of these commitments is unknown and the commitments are callable on demand at any time prior to the expiration of the commitment. These unfunded commitments are not recorded on the condensed consolidated statements of financial condition. These commitments do not include potential future commitments approved by the Company that are not yet legally binding. The Company intends to make additional capital commitments from time to time to fund additional investment products for, and with, its clients.
Acquisition. In August 2023, BlackRock completed the acquisition of Kreos Capital, a leading provider of growth and venture debt financing to companies in the technology and healthcare industries. The Company believes this acquisition will add to the Company's position as a leading global credit asset manager and advance its ambitions to provide clients with a diverse range of private market investment products and solutions. The financial impact of the transaction is not expected to be material to the condensed consolidated financial statements.
66
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expense during the reporting periods. Actual results could differ significantly from those estimates. These estimates, judgments and assumptions are affected by the Company’s application of accounting policies. Management considers the following accounting policies and estimates critical to understanding the condensed consolidated financial statements. These policies and estimates are considered critical because they had a material impact, or are reasonably likely to have a material impact on the Company’s condensed consolidated financial statements and because they require management to make significant judgments, assumptions or estimates. For a summary of these and additional accounting policies, see Note 2, Significant Accounting Policies, in the notes to the condensed consolidated financial statements. In addition, see Critical Accounting Policies and Estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 2, Significant Accounting Policies, in the 2022 Form 10-K for further information.
Consolidation. The Company consolidates entities in which the Company has a controlling financial interest. The company has a controlling financial interest when it owns a majority of the VRE or is a primary beneficiary (“PB”) of a VIE. Assessing whether an entity is a VIE or a VRE involves judgment and analysis on a structure-by-structure basis. Factors considered in this assessment include the entity’s legal organization, the entity’s capital structure, the rights of equity investment holders, the Company’s contractual involvement with and economic interest in the entity and any related party or de facto agent implications of the Company’s involvement with the entity. Entities that are determined to be VREs are consolidated if the Company can exert control over the financial and operating policies of the investee, which generally exists if there is greater than 50% voting interest. Entities that are determined to be VIEs are consolidated if the Company is the PB of the entity. BlackRock is deemed to be the PB of a VIE if it (1) has the power to direct the activities that most significantly impact the entities’ economic performance and (2) has the obligation to absorb losses or the right to receive benefits that potentially could be significant to the VIE. There is judgment involved in assessing whether the Company is the PB of a VIE. In addition, the Company’s ownership interest in VIEs is subject to variability and is impacted by actions of other investors such as on-going redemptions and contributions. The Company generally consolidates VIEs in which it holds an economic interest of 10% or greater and deconsolidates such VIEs once its economic interest falls below 10%. As of June 30, 2023, the Company was deemed to be the PB of 94 VIEs. See Note 5, Consolidated Sponsored Investment Products, in the notes to the condensed consolidated financial statements for more information.
Fair Value Measurements. The Company’s assessment of the significance of a particular input to the fair value measurement according to the fair value hierarchy (i.e., Level 1, 2 and 3 inputs, as defined) in its entirety requires judgment and considers factors specific to the financial instrument. See Note 2, Significant Accounting Policies, and Note 7, Fair Value Disclosures, in the notes to the condensed consolidated financial statements for more information on fair value measurements.
Investment Advisory Performance Fees / Carried Interest. The Company receives investment advisory performance fees, including incentive allocations (carried interest) from certain actively managed investment funds and certain separately managed accounts ("SMAs"). These performance fees are dependent upon exceeding specified relative or absolute investment return thresholds, which vary by product or account, and include monthly, quarterly, annual or longer measurement periods.
Performance fees, including carried interest, are recognized when it is determined that they are no longer probable of significant reversal (such as upon the sale of a fund’s investment or when the investment performance exceeds a contractual threshold at the end of a specified measurement period). Given the unique nature of each fee arrangement, contracts with customers are evaluated on an individual basis to determine the timing of revenue recognition. Significant judgment is involved in making such determination. Performance fees typically arise from investment management services that began in prior reporting periods. Consequently, a portion of the fees the Company recognizes may be partially related to the services performed in prior periods that meet the recognition criteria in the current period. At each reporting date, the Company considers various factors in estimating performance fees to be recognized, including carried interest. These factors include but are not limited to whether: (1) the amounts are dependent on the financial markets and, thus, are highly susceptible to factors outside the Company’s influence; (2) the ultimate payments have a large number and a broad range of possible amounts; and (3) the funds or SMAs have the ability to (a) invest or reinvest their sales proceeds or (b) distribute their sales proceeds and determine the timing of such distributions.
67
The Company is allocated/distributed carried interest from certain alternative investment products upon exceeding performance thresholds. The Company may be required to reverse/return all, or part, of such carried interest allocations/distributions depending upon future performance of these products. Carried interest subject to such clawback provisions is recorded in investments or cash and cash equivalents to the extent that it is distributed, on its condensed consolidated statements of financial condition. The Company records a liability for deferred carried interest to the extent it receives cash or capital allocations related to carried interest prior to meeting the revenue recognition criteria. At June 30, 2023 and December 31, 2022, the Company had $1.7 billion and $1.4 billion, respectively, of deferred carried interest recorded in other liabilities on the condensed consolidated statements of financial condition. A portion of the deferred carried interest may also be paid to certain employees and other third parties. The ultimate timing of the recognition of performance fee revenue and related compensation expense, if any, is unknown. See Note 15, Revenue, in the notes to the condensed consolidated financial statements for detailed changes in the deferred carried interest liability balance for the three and six months ended June 30, 2023 and 2022.
68
Item 3. Quantitative and Qualitative Disclosures About Market Risk
AUM Market Price Risk. BlackRock’s investment advisory and administration fees are primarily comprised of fees based on a percentage of the value of AUM and, in some cases, performance fees expressed as a percentage of the returns realized on AUM. At June 30, 2023, the majority of the Company’s investment advisory and administration fees were based on average or period end AUM of the applicable investment funds or separate accounts. Movements in equity market prices, interest rates/credit spreads, foreign exchange rates or all three could cause the value of AUM to decline, which would result in lower investment advisory and administration fees.
Corporate Investments Portfolio Risks. As a leading investment management firm, BlackRock devotes significant resources across all of its operations to identifying, measuring, monitoring, managing and analyzing market and operating risks, including the management and oversight of its own investment portfolio. The Board of Directors of the Company has adopted guidelines for the review of investments (or commitments to invest) to be made by the Company, requiring, among other things, that certain investments be referred to the Board of Directors, depending on the circumstances, for notification or approval.
In the normal course of its business, BlackRock is exposed to equity market price risk, interest rate/credit spread risk and foreign exchange rate risk associated with its corporate investments.
BlackRock has investments primarily in sponsored investment products that invest in a variety of asset classes, including real assets, private equity and hedge funds. Investments generally are made for co-investment purposes, to establish a performance track record, to hedge exposure to certain deferred cash compensation plans or for regulatory purposes. The Company has a seed capital hedging program in which it enters into futures to hedge market and interest rate exposure with respect to its total portfolio of seed investments in sponsored investment products. The Company had outstanding futures related to its seed capital hedging program with an aggregate notional value of approximately $1.6 billion and $1.5 billion at June 30, 2023 and December 31, 2022, respectively.
At June 30, 2023, approximately $5.8 billion of BlackRock’s investments were maintained in consolidated sponsored investment products accounted for as variable interest entities or voting rights entities. Excluding the impact of the Federal Reserve Bank stock, carried interest, investments made to hedge exposure to certain deferred cash compensation plans and certain investments that are hedged via the seed capital hedging program, the Company’s economic exposure to its investment portfolio is $3.8 billion. See Statement of Financial Condition Overview-Investments in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information on the Company’s investments.
Equity Market Price Risk. At June 30, 2023, the Company’s net exposure to equity market price risk in its investment portfolio was approximately $1.5 billion of the Company’s total economic investment exposure. Investments subject to market price risk include public and private equity and real assets investments, hedge funds and funds of funds as well as mutual funds. The Company estimates that a hypothetical 10% adverse change in market prices would result in a decrease of approximately $153 million in the carrying value of such investments.
Interest Rate/Credit Spread Risk. At June 30, 2023, the Company was exposed to interest rate risk and credit spread risk as a result of approximately $2.3 billion of investments in debt securities and sponsored investment products that invest primarily in debt securities. Management considered a hypothetical 100 basis point fluctuation in interest rates or credit spreads and estimates that the impact of such a fluctuation on these investments, in the aggregate, would result in a decrease, or increase, of approximately $63 million in the carrying value of such investments.
Foreign Exchange Rate Risk. As discussed above, the Company invests in sponsored investment products that invest in a variety of asset classes. The carrying value of the total economic investment exposure denominated in foreign currencies, primarily the British pound and euro, was approximately $1.1 billion at June 30, 2023. A 10% adverse change in the applicable foreign exchange rates would result in approximately a $107 million decline in the carrying value of such investments.
Other Market Risks. The Company executes forward foreign currency exchange contracts to mitigate the risk of certain foreign exchange risk movements. At June 30, 2023, the Company had outstanding forward foreign currency exchange contracts with an aggregate notional value of approximately $2.5 billion, with expiration dates in July 2023. In addition, the Company entered into futures to hedge economically the exposure to market movements on certain deferred cash compensation plans. At June 30, 2023, the Company had outstanding exchange traded futures with aggregate notional values related to its deferred cash compensation hedging program of approximately $186 million, with expiration dates during the third quarter of 2023.
69
Item 4. Controls and Procedures
Disclosure Controls and Procedures. Under the direction of BlackRock’s Chief Executive Officer and Chief Financial Officer, BlackRock evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, BlackRock’s Chief Executive Officer and Chief Financial Officer have concluded that BlackRock’s disclosure controls and procedures were effective.
Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2023 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
70
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
For a discussion of the Company’s legal proceedings, see Note 14, Commitments and Contingencies, in the notes to the condensed consolidated financial statements of this Form 10-Q.
71
Item 1A. Risk Factors
In addition to the other information set forth in this report, the risks discussed in BlackRock's Annual Report on Form 10-K for the year ended December 31, 2022 could materially affect our business, financial condition, operating results and nonoperating results.
72
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended June 30, 2023, the Company made the following purchases of its common stock, which is registered pursuant to Section 12(b) of the Exchange Act.
|
|
Total Number |
|
|
|
Average |
|
|
Total Number |
|
|
Maximum |
|
||||
April 1, 2023 through April 30, 2023 |
|
|
166,356 |
|
|
|
$ |
678.22 |
|
|
|
162,381 |
|
|
|
7,231,022 |
|
May 1, 2023 through May 31, 2023 |
|
|
376,116 |
|
|
|
$ |
652.41 |
|
|
|
371,990 |
|
|
|
6,859,032 |
|
June 1, 2023 through June 30, 2023 |
|
|
36,956 |
|
|
|
$ |
674.42 |
|
|
|
32,724 |
|
|
|
6,826,308 |
|
Total |
|
|
579,428 |
|
|
|
$ |
661.23 |
|
|
|
567,095 |
|
|
|
|
|
73
Item 6. Exhibits
Exhibit No. |
|
Description |
|
|
|
4.1(1) |
|
|
|
|
|
|
10.1
|
|
|
|
|
|
31.1 |
|
|
|
|
|
31.2 |
|
|
|
|
|
32.1 |
|
Section 906 Certification of Chief Executive Officer and Chief Financial Officer |
|
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
|
|
|
+ Denotes compensatory plans or arrangements.
74
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
BLACKROCK, INC. |
|
|
|
(Registrant) |
|
|
|
|
|
|
|
By: |
/s/ Martin S. Small |
Date: August 4, 2023 |
|
|
Martin S. Small |
|
|
|
Senior Managing Director & Chief Financial Officer (Principal Financial Officer) |
75
Exhibit 10.1
BLACKROCK, INC.
SECOND AMENDED AND RESTATED 1999 STOCK AWARD AND INCENTIVE PLAN
PERFORMANCE-BASED STOCK OPTION AGREEMENT
GRANT NOTICE
|
Name of Optionee:
|
[ ] (the “Optionee”) |
|
Number of Shares Subject to the Option:
|
[ ] shares of common stock, $0.01 par value, of BlackRock, Inc. (the “Shares”). |
|
Option Exercise Price Per Share:
|
$673.58 |
|
Grant Date:
|
May 30, 2023 |
Vesting Dates1: |
First Installment: Option relating to 25% of the Shares on May 30, 2027
|
|
Second Installment: Option relating to 25% of the Shares on May 30, 2028
|
|
|
Third Installment: Option relating to 50% of the Shares on May 30, 2029 |
Expiration Date: |
May 30, 2032
|
This performance-based stock option (the “Option”) represents the right to purchase Shares in accordance with and subject to the terms and conditions of this Grant Notice and the Option Terms and Conditions (including the appendix attached hereto) (collectively, this “Agreement”) and the BlackRock, Inc. Second Amended and Restated 1999 Stock Award and Incentive Plan, and including, without limitation, the satisfaction of the performance conditions set forth in this Agreement.
* * * * * * * *
1
OPTION TERMS AND CONDITIONS
The Optionee and BlackRock, Inc., a Delaware company, and its successors (the “Company”) hereby agree as follows:
2
Solely in respect of IFPR MRTs, at no time shall any Vesting Date deviate from the minimum three-year mandatory vesting period nor occur earlier than any applicable required deferral period, as provided for in the BGL Remuneration Policy. In the event of a conflict between the Vesting Dates specified in the Grant Notice on the one hand and the minimum three-year mandatory vesting period and applicable deferral requirement on the other hand, as provided for in the BGL Remuneration Policy, then the minimum three-year mandatory vesting period and applicable deferral requirement shall prevail.
In addition, certain other terms used herein have definitions given to them in the first place in which they are used.
3
Solely in respect of IFPR MRTs, any Options granted to persons identified as IFPR MRTs are governed by the BGL Remuneration Policy and the IFPR Malus and Clawback Policy, copies of which are available on the Policy Library or upon request (the "IFPR Policies"). The IFPR Policies implement the IFPR Remuneration Regulations (as defined in the IFPR Policies). In the event of any conflict between the Grant Notice, this Agreement, and the provisions of the Plan on the one hand and the IFPR Policies and IFPR Remuneration Regulations on the other hand, the IFPR Policies and IFPR Remuneration Regulations shall prevail.
Solely in respect of IFPR MRTs, notwithstanding any provision to the contrary herein, at no time shall any Vesting Date deviate from the minimum three-year mandatory vesting period nor occur earlier than any applicable required deferral period, as provided for in the BGL Remuneration Policy, in accordance with the terms and conditions set forth herein.
4
Solely in respect of IFPR MRTs, in addition to the holdback arrangements included in this Section 3, the IFPR Malus and Clawback Policy applies to any Option awarded to an IFPR MRT.
Achievement of the Performance Conditions shall be determined by the Committee. If the Performance Conditions are not achieved, as determined by the Committee, on or prior to the fourth anniversary of the Grant Date, the Option shall terminate immediately effective as of such date, with no payment made in consideration therefor.
5
6
7
Solely in respect of IFPR MRTs, nothing in this Section 6 shall cause any Vesting Date of any Option awarded to an IFPR MRT to deviate from the minimum three-year mandatory vesting period nor occur earlier than any applicable required deferral period, as provided for in the BGL Remuneration Policy, nor impact the retention period set forth in Section 5(f) hereof.
8
9
Solely in respect of IFPR MRTs, if there is a conflict between this Agreement and/or the Plan on the one hand and the IFPR Polices and IFPR Remuneration Regulations on the other hand, the IFPR Policies and/or IFPR Remuneration Regulations shall prevail and the entitlements under this Agreement and/or the Plan shall at all times be subject to the IFPR Policies and IFPR Remuneration Regulations and may at all times be amended to comply with the IFPR Remuneration Regulations, without further action by the Optionee as set forth in Section 10(d) hereof.
10
11
12
If to the Company:
BlackRock, Inc.
50 Hudson Yards
New York, New York 10001
Attn: General Counsel
If to the Optionee:
To the last address on file with the Company and/or the Company’s appointed third-party administrator.
13
Additional information on BlackRock, Inc. (the issuer), including (without limitation) details of the rights attaching to the Company's stock, the current stock price, SEC filings, dividend history, the Company's Bylaws and the most recent published annual reports, can be found on BlackRock's website at www.blackrock.com and, in particular, the Investor Relations section.
The reasons for the Award under the Plan, and the terms and conditions to which your Award is subject, is set out above and in Appendix A attached hereto and the rules of the Plan (a copy of which is available from www.computershare.com or via download from the SEC website at www.sec.gov). The maximum number of stock in the capital of BlackRock that can be purchased or awarded under the Plan as at date of grant is 41,500,000 shares and the minimum number is nil.
* * * * * * * *
14
APPENDIX A
Optionee’s Covenants and Acknowledgements
This Appendix A includes standard covenants and acknowledgements. Capitalized terms contained in this Appendix A and not defined herein shall have the same meaning as such terms are defined in the Agreement into which this Appendix A is incorporated by reference and to which this Appendix A is attached, or the Plan, as applicable.
1. Non-Disclosure / Intellectual Property. The Optionee may not, during or subsequent to the Optionee’s employment with the Company or any of its Affiliates or Subsidiaries, without the prior written consent of the Company, use, divulge, disclose, or make accessible to any other person, firm, partnership, corporation or other entity any Confidential Information (as defined below) pertaining to the business of the Company or any of its Affiliates or Subsidiaries except (i) while employed by the Company or any of its Affiliates or Subsidiaries, in the business of and for the benefit of the Company or any of its Affiliates or Subsidiaries, (ii) when required to do so by a court of competent jurisdiction or regulatory body, or (iii) as provided by the Permitted Activities described below. In the event that the Optionee becomes compelled by an order of a court to disclose any Confidential Information, the Optionee is required to provide the Company with prompt, prior written notice and to disclose only that portion of the Confidential Information which is legally required.
For purposes of this Agreement:
Confidential Information: “Confidential Information” shall mean any non-public information (whether oral, written or electronically stored) relating to the business or the affairs of the Company and its Affiliates or of any Client of the Company or of any of its Affiliates or Subsidiaries, whether obtained from the Company or any of its Affiliates or Subsidiaries, any Client of the Company or any of its Affiliates or Subsidiaries or known by the Optionee as a consequence of or through the Optionee’s relationship with the Company or any of its Affiliates or Subsidiaries, whether obtained before or after the Optionee executes this Agreement and whether obtained from an entity which was not an Affiliate or Subsidiary at the time such information became available but which is now or later becomes an Affiliate or Subsidiary of the Company. Such information includes but is not limited to proprietary, trade secrets, and/or non-public information concerning the financial data, strategic or financial plans, models, business plans, proprietary project information, marketing plans, future transactions (regardless of whether or not such transactions are executed), customer lists, employee lists, another employee’s compensation (only if the Optionee became aware of such information in connection with the Optionee’s responsibility), partners’ compensation, and other proprietary and confidential information of the Company, the Company’s Affiliates or Subsidiaries or any of their Clients, that, in any case, is not otherwise available to the public. Confidential Information includes information encompassed in drawings, designs, plans, proposals, reports, research, marketing and sales plans, financial information, costs, quotations, specification sheets and recording media. Confidential Information also includes information which relates directly or indirectly to the computer systems and computer technology of the Company and its Affiliates and Subsidiaries, including but not limited to source codes, object codes, reports, flow charts, screens, algorithms, use manuals, installation and/or operation manuals, computer software, spreadsheets, data computations, formulas, techniques, databases, and any other form or compilation of computer-related information.
15
Permitted Activities: Notwithstanding anything herein to the contrary, nothing in this Agreement shall prohibit or restrict the Optionee from responding to any inquiry from, providing testimony before, or making reports of possible violations of federal or state law or regulation to, any governmental agency or entity, any other self-regulatory organization, or any other federal or state regulatory authority, specifically including, without limitation, the Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA), and in the United States, the Equal Employment Opportunity Commission and the National Labor Relations Board, or otherwise limit the Optionee’s rights under the BlackRock Global Policy for Reporting Illegal or Unethical Conduct. Furthermore, nothing in this Agreement shall prevent the Optionee from disclosing discriminatory, harassing, or physical unlawful workplace or work-related conduct.
For any Optionee who resides or works in the United Kingdom, nothing in this Agreement shall preclude the Optionee from making a protected disclosure in accordance with the provisions set out in the Employment Rights Act of 1996. The Optionee acknowledges for the purpose of section 39 of the UK Patents Act 1977 (as amended) and otherwise that because of the nature of his duties and the particular responsibilities arising from the nature of the Optionee’s duties, the Optionee has and at all times during his or her employment will have a special obligation to further the interests of the undertakings of the Company. Without prejudice to anything else in this clause, the Optionee: (i) undertakes to notify and disclose to the Company in writing full details of all relevant information, inventions or materials of any other nature, including the related intellectual property rights, made, originated or developed by him at any time in the scope of, or otherwise related to the business of the Company forthwith on creation (whether or not in material form and whether or not made, originated or developed during normal working hours); (ii) acknowledges that, save as provided by law, no further remuneration or compensation is or may become due to the Optionee in respect of the performance of his or her obligations under this clause; (iii) waives any moral rights (as provided for by Chapter IV of the UK Copyright Designs and Patents Act 1988 or any similar provisions of law in any jurisdiction) in any confidential information, inventions or materials or other information referred to in this clause, originated, developed or produced by him or her; and (iv) agrees not to institute, support, maintain or permit any action or claim to the effect that any treatment, exploitation or use of such information, invention or other materials or other information referred to in this clause infringes the Optionee’s moral rights including (but without limitation) the right to be identified, the right of integrity and the right against false attribution provided for in the UK Copyright Designs and Patents Act 1988.
It is the policy of the Company and its Affiliates and Subsidiaries not to use or accept any confidential or proprietary information of third parties, including former employers of the Optionee. The Optionee shall not disclose such confidential or proprietary information of third parties to the Company or any of its Affiliates or Subsidiaries, their employees, agents, or independent contractors, or to any other third party, and shall not use such confidential or proprietary Information while employed by the Company or any of its Affiliates or Subsidiaries, unless the Optionee has obtained and presented to the Company the appropriate authorizations for such use or disclosure from such third parties and has also obtained the Company’s approval of such use or disclosure.
16
The Company and its Affiliates and Subsidiaries may, from time to time, enter into agreements and/or business relationships with third party vendors and/or suppliers of information as a result of which the Optionee may have access to confidential information proprietary to such third parties (“Third Party Confidential Information”). The use and disclosure by the Optionee of Third-Party Confidential Information shall be governed by the terms and conditions of this Agreement and shall be in strict compliance with any existing agreement between the Company or any of its Affiliates or Subsidiaries and the third parties to hold such information confidential. From time to time, the Company and its Affiliates and Subsidiaries enter into such agreements with third parties. Prior to using any Third -Party Confidential Information, the Optionee is required to inquire whether and to what extent the use of such Third-Party Confidential Information is governed by an existing agreement and must comply with the terms of any such agreement.
In addition to the above, the Company and its Affiliates and Subsidiaries may at times develop appropriate information barriers to assure that restricted information related to a Client of the Company or an Affiliate or Subsidiary is not improperly communicated or disclosed to other employees within the Company and its Affiliates and Subsidiaries. If the Optionee has reason to believe that he or she is subject to any information barrier, the Optionee is required to inquire of the Legal & Compliance Department as to the applicability and terms of any such information barrier. Any information barriers shall be established pursuant to the Company’s Global Material Nonpublic Information Barrier Policy and Procedures.
Upon the Optionee’s Termination of Employment for any reason, the Optionee is required to promptly (or at such sooner time as requested by the Company or Affiliate or Subsidiary) return to the Company all Confidential Information (including all reproductions thereof whether on computer, electronic media or otherwise) furnished to or otherwise in the Optionee’s possession and may not contact any employee of the Company or its Affiliates or Subsidiaries for the purpose of soliciting Confidential Information.
Misappropriation of BlackRock’s trade secrets in breach of this Agreement may subject the Optionee to liability under the Defend Trade Secrets Act of 2016 (the “DTSA”), entitle the Company to injunctive relief, and require the Optionee to pay compensatory damages, double damages, and attorneys’ fees.
Notwithstanding any other provisions of this Agreement, the Optionee understands and agrees that pursuant to the United States Defend Trade Secrets Act of 2016:
An individual may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding.
Further, an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the employer's trade secrets to the attorney and use the trade secret information in the court proceeding if the individual: (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.
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The Optionee agrees that the Company is the exclusive owner of any ideas, products, materials, discoveries, inventions, developments, know how, trade secrets, original works of authorship, computer programs, research, writing or other work products developed by the Optionee that (i) are in the scope of, or otherwise related to the business or actual or demonstrably anticipated research or development of the Company or its Affiliates and Subsidiaries, (ii) developed using equipment, resources, or trade secrets of the Company or its Affiliates or Subsidiaries, and/or (iii) result from any work performed by the Optionee for the Company or its Affiliates and Subsidiaries (“Company Inventions”). Company Inventions will not include, and the provisions of this Agreement requiring assignment of inventions to the Company do not apply to, any invention which qualifies fully for exclusion under the provisions of applicable local law, if any. The Optionee hereby transfers and assigns such Company Inventions to BlackRock and the Optionee shall whenever requested to do so by the Company or an Affiliate or Subsidiary, execute any and all applications, assignments, or other instruments that the Company or an Affiliate or Subsidiary deems necessary to apply for and obtain patents or copyrights or other intellectual property protection in the United States or any other country or otherwise protect the Company’s and its Affiliates’ and Subsidiaries’ interests therein. Such obligations shall continue beyond the Optionee’s Termination of Employment with the Company or an Affiliate or Subsidiary with respect to Company Inventions developed, conceived or made by the Optionee during the term of the Optionee’s employment with the Company or its Affiliates or Subsidiaries. Further, the Optionee agrees that such obligation will be binding on the Optionee’s assigns, executors, administrators and other legal representatives.
2. Non-Solicitation of Clients, etc. The Optionee shall not, for a period of one year, or during the Relevant Period where applicable, immediately following Termination of Employment, whether on his or her own behalf or on behalf of or in conjunction with any person, company, business entity or other organization whatsoever, directly or indirectly, (i) call on, interfere with, solicit or assist in soliciting the business of any “Client” or “Prospective Client” or (ii) accept business from, or enter into a relationship with, any such “Client” or “Prospective Client”, in each case, with whom the Optionee has had, direct or indirect substantive exposure or dealings on behalf of the Company or its Affiliates or Subsidiaries (including in a support or supervisory capacity) during the one year period immediately preceding his or her Termination of Employment. Notwithstanding the foregoing, the Optionee may engage in business activities with “Intermediary Clients”, provided, that, the Optionee shall not (x) interact with any Intermediary Client with respect to business placed with or through such Intermediary Client by the Company or any of its Affiliates or Subsidiaries or (y) engage in any conduct interfering with or damaging the Company’s (or any of its Affiliates’ or Subsidiaries’) relationship with any Intermediary Client.
For any Optionee who resides or works in the United Kingdom, the term “Relevant Period” shall mean the period as defined by reference to the Optionee’s corporate title as follows: twelve months for Managing Directors and Directors and above; six months for Vice Presidents; and three months for Associates.
For any Optionee who resides or works in the United Kingdom, the term “Prospective Client” shall be deleted from the foregoing paragraph 2 (Non-Solicitation of Clients, etc.). Additionally, the Optionee shall not, during the Relevant Period immediately following the Termination of Employment, whether on his or her own behalf or on behalf of or in conjunction with any person, company, business entity or other organization whatsoever, directly or indirectly, except in the event of a wrongful termination by the Company or an Affiliate or Subsidiary, (i) call on, interfere with or solicit or assist in soliciting or attempt to call on, solicit, interfere with or assist in soliciting in competition with the Company or any of its Affiliates or Subsidiaries, the business of any “Prospective Client”, or (ii) accept business from, or enter into a relationship with, any such “Prospective Client”, with whom the Optionee has had substantive exposure or dealings on behalf of the Company or any of its Affiliates or Subsidiaries (including in a support or supervisory capacity) during the one year period immediately preceding the termination of his or her employment or with whom employees reporting to the Optionee have had substantive exposure or dealings on behalf of the Company or any of its Affiliates or Subsidiaries (including in a support or supervisory capacity) during the one year period immediately preceding the termination of his or her employment.
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For purposes of this Agreement, the terms:
(a) “Client” shall mean any person, firm, company, or other organization (including an Intermediary Client) to whom the Company or any of its Affiliates or Subsidiaries has supplied services, products or professional advice;
(b) “Prospective Client” shall mean any person, firm, company or other organization (including an Intermediary Client) with whom the Company or any of its Affiliates or Subsidiaries has had negotiations or discussions regarding the possible supply of products or advice, or with respect to whom the Company or any of its Affiliates or Subsidiaries has expended significant time, effort or money in developing a bid or proposal for the supply of services, products or advice; and
(c) “Intermediary Client” shall mean any person or entity (such as a broker dealer, distributor, financial adviser, administrator or other marketing or service organization) through which the Company or any of its Affiliates or Subsidiaries offers, markets, distributes or provides its services, products or advice.
3. Non-Enticement of Employees; No Hire. The Optionee shall not, during his or her employment and for a period of one year immediately following Termination of Employment, either on his or her own account or in conjunction with or on behalf of any other person, company, business entity or other organization whatsoever, directly or indirectly: (i) induce, solicit, entice, participate in or procure any person who is an employee of the Company or any of its Affiliates or Subsidiaries to leave such employment or (ii) accept into employment, hire or otherwise engage or use the services of, or actually interfere with the Company’s or any Affiliates’ or Subsidiaries’ relationship with, any person who is an employee of the Company or any of its Affiliates or Subsidiaries or who was an employee of the Company or any of its Affiliates or Subsidiaries during the period commencing one year prior to the Termination of Employment.
4. Non-Disparagement; No Conflicts. Except for the Permitted Activities described above, the Optionee shall not at any time during or subsequent to the Optionee’s employment with the Company or any of its Affiliates or Subsidiaries, criticize, speak ill of, disparage or make false statements in respect of the Company, its Affiliates or Subsidiaries or any of their employees; provided, however, that the Optionee shall not be prohibited from making truthful statements about the Company or any of its Affiliates or Subsidiaries. The Optionee also shall not, during the course of employment with the Company or any of its Affiliates or Subsidiaries take any action which conflicts with (or appears to conflict with) the Company’s or any of its Affiliates’ or Subsidiaries’ business interests except if ordered to do so by a court or government agency.
Opportunity to Review. By accepting the Option, you acknowledge that you have had at least fourteen (14) calendar days in which to review and consider this Appendix A and affirm your agreement to the terms and effect of this Appendix A. The Company has advised you to consult with an attorney prior to affirming this Appendix A. By affirming, you acknowledge that you have had a full opportunity to review this Appendix A with an attorney of your choice.
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BLACKROCK, INC.
By: _____________________________________
Name: Laurence D. Fink
Title: Chairman and Chief Executive Officer I, Laurence D. Fink, certify that:
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Exhibit 31.1
CEO CERTIFICATION
Date: August 4, 2023 |
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By: |
/s/ Laurence D. Fink |
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Laurence D. Fink Chairman & Chief Executive Officer |
Exhibit 31.2
CFO CERTIFICATION
I, Martin S. Small, certify that:
Date: August 4, 2023 |
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By: |
/s/ Martin S. Small |
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Martin S. Small Senior Managing Director & Chief Financial Officer |
Exhibit 32.1
Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of BlackRock, Inc. (the “Company”) for the quarterly period ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Laurence D. Fink, as Chief Executive Officer of the Company, and Martin S. Small, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
/s/ Laurence D. Fink |
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Name: |
Laurence D. Fink |
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Title: |
Chairman & Chief Executive Officer |
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Date: |
August 4, 2023 |
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/s/ Martin S. Small |
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Name: |
Martin S. Small |
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Title: |
Senior Managing Director & Chief Financial Officer |
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Date: |
August 4, 2023 |
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